How to Calculate a Trade Discount

Written by carter mcbride
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How to Calculate a Trade Discount
Invoices will show the actual cost of the product net of any trade discount. (Blue pen in front of invoice image by millann from Fotolia.com)

A trade discount is similar to a sales discount in that the purchaser can buy a product for less than the list price of the product. Companies usually give trade discounts to other companies that buy often or buy large amounts of products. Normally, a trade discount is presented as a percentage off of the list price. For example, a trade discount would be 10 per cent off the list price.

Skill level:
Moderately Easy

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Instructions

  1. 1

    Determine the list price of the object. For example, Company A is selling widgets for £325,000.

  2. 2

    Determine the trade discount percentage. For example, Company B wants to buy the £325,000 widgets and has always been a good customer to Company A so Company A offers a trade discount of 10 per cent to Company B.

  3. 3

    Multiply the price by the trade discount percentage to determine the amount of the trade discount. In our example, 10 per cent of £325,000 equals a trade discount of £32,500.

  4. 4

    Subtract the trade discount from the selling price to determine the selling price net any trade discounts. In our example, £325,000 minus £32,500 equals a net selling price of £292,500.

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