A trade discount is a reduction in the list price of a product or service offered to a specific group of buyers, such as wholesalers, retailers, or manufacturers. The trade discount formula is used to calculate the actual price that the buyer will pay after the discount has been applied. For example, if a product has a list price of $100 and a trade discount of 20%, the buyer will pay $80 for the product.
Trade discounts are important because they allow buyers to purchase products and services at a reduced price. This can help businesses save money on their operating costs and increase their profits. Trade discounts can also be used to encourage buyers to purchase larger quantities of products or services. Historically, trade discounts have been used for centuries to facilitate commerce and trade between businesses.