Discounts and benefits is a reduction in the basic price of goods or services.
They can happen anywhere on the distribution channel, modify the manufacturer list price (specified by the manufacturer and often printed on the package), the retail price (set by the retailer and often attached to the product with stickers), or the price list (quoted to potential buyers, usually in written form).
There are many goals for discounts, including to increase short-term sales, to move outdated stocks, to reward valuable customers, to encourage distribution channel members to perform a function, or to reward rewarding behavior for discount publishers. Some discounts and benefits are a form of sales promotion. Many price discrimination methods allow sellers to capture some of the consumer surplus.
Video Discounts and allowances
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The most common discounts and benefits are listed below.
Dealing with payment
Promo payment discount
Trade Discount is a discount provided by a wholesaler or manufacturer to a retailer with a selling price or catalog price. Cash Discount is a reduction of the price given to the debtor to motivate the debtor to make the payment within the stipulated time. These discounts are intended to speed up payments and thereby provide cash flow to the company. They are sometimes used as a promotional tool.
Example
- 2/10 net 30 - this means the buyer must pay within 30 days from the invoice date, but will receive a 2% discount if they pay within 10 days from the invoice date.
- 3/7 EOM - this means buyer will receive a 3% cash discount if the bill is paid within 7 days after the end of the month indicated on the invoice date. If an invoice is received on or before the 25th of the month, the payment is due on the 7th day of the following calendar month. If the correct invoice is received after the 25th of the month, the payment is due on the 7th day of the second calendar month.
- 3/7 EOM net 30 - this means buyers have to pay within 30 days from the invoice date, but will receive 3% discount if they pay within 7 days after the end of the month indicated on the invoice date. If an invoice is received on or before the 25th of the month, the payment is due on the 7th day of the following calendar month. If the correct invoice is received after the 25th of the month, the payment is due on the 7th day of the second calendar month.
- 2/15 net 40 ROG - this means buyer must pay within 40 days of receipt of goods, but will receive 2% discount if paid within 15 days from invoice date. (ROG stands for "Receipt of goods.")
The preferred payment method of payment
Some retailers (especially small retailers with low margins) offer discounts to paying customers with cash, to avoid paying fees on credit card transactions.
Partial_payment_discount "> parent discount payment
Similar to Trade discounts, these are used when the seller wants to increase cash flow or liquidity, but find that buyers usually can not meet the desired discount deadline. Partial discounts for any payments made by the buyer assist the seller's cash flow partially.
Shear scale
Discounts are offered based on a person's ability to pay. More common with nonprofit organizations compared to non-profit retailers.
Forward dating
This is where buyers do not pay the goods until well after they arrive. The date on the invoice is moved forward - example: buy item in November for sale during the holiday season December, but the date of payment on invoice is January 27.
Seasonal discount
This is a price reduction given when orders are placed in a slack period (for example: buying skis in April in the northern hemisphere, or in September in the southern hemisphere). On shorter time scales, happy hours can fall in this category. Generally, this discount is referred to as "X-Dating" or "Ex-Dating". Examples of X-Dating are:
- 3/7 net 30 extra 10 - this means buyers have to pay within 30 days from the invoice date but will receive 3% discount if they pay within 7 days after the end of the month listed on the invoice date plus an additional 10 days. With Mwaisabila
Dealing with trading
Bargain
Bargain is where sellers and buyers negotiate prices below the original request price.
Trade discount
Trade discounts, also called functional discounts, are payments to distribution channel members to perform some functions. Examples of these functions are warehousing and racking. Trade discounts are often combined to include a range of functions, for example 20/12/5 can show 20% discount on product warehousing, additional 12% discount for product shipments, and an additional 5% discount to keep shelves stocked. Trade discounts are most common in industries where retailers hold most of the power in the distribution channel (referred to as channel captains).
Trade discounts are given to try to increase the volume of sales made by suppliers.
Discounts described as trade rate discounts are sometimes called "trade discounts". A trading discount is a discount that is allowed at the retail price of a product or something. for example The retail price of the cream is 25 and the trade discount is 2% at 25.
Trade rate discounts
Trade-level discounts, sometimes also called "trade discounts", are offered by the seller to the buyer for trading or resale purposes, not to the end user. For example, a pharmacist may offer discounts on over-the-counter medicines to physicians who buy them for distribution to the patient's own physician. Sellers who supply trades or retailers, and the general public will have a general sale price for anyone, and will offer trade discounts to bona fide trade customers.
Trade-in credits
Trade-in credits, also called trade-up credits, are discounts or credits granted to return something. Items returned may have little value for money, as old versions of new items purchased, or may be eligible for resale as used goods. The idea from the seller's point of view is to offer some discounts but the buyer shows some "countermeasure" to get this special discount. Sellers like this because the discount is not only "free" and makes negotiating price/value in the future easier. The buyer has the advantage of getting some value for something that is no longer in use. Examples can be found in many industries.
Dealing with quantity
This is a reduced price given for wholesale purchases. The rationale behind them is to get economies of scale and provide some (or all) of these savings to customers. In some industries, buyer groups and co-ops have been formed to take advantage of these discounts. Generally there are two types:
Cumulative quantity discount
The cumulative quantity discount, also called the accumulated discount, is a price reduction based on quantity purchased over a period of time. The hope is that they will charge an implied switching fee and thus buyer bonds to the seller.
Non-cumulative quantity deduction
This is a price reduction based on a single order quantity. The hope is that they will drive larger orders, thereby reducing billing, order filling, shipping, and sales personnel costs.
Price dependence on quantity
The extreme form of quantity discount occurs when, in the quantity range, the price does not depend on the quantity:
- if someone wants to be less than the minimum amount someone has to pay for the minimum amount anyway
- if someone wants an amount between two of the fixed amount offered, someone has to pay for a higher amount
This is also true in the case of services with "quantity" referring to time. For example, admission to the zoo is usually for a day; if someone stays shorter, it costs the same. This is a pass type for unlimited service usage for a day, where people can tell whether or not, when leaving and come back, someone has to pay again. Similarly pass can be for another period. In a long-term case, it is clear that one can go and return without paying again.
If one has to buy more than one desire, we can distinguish between unused advantages, or surplus into disruption, for example by having to carry large containers.
Dealing with customer characteristics
The following discounts must be made with customer-specific characteristics.
Disabled discount
Discounts are offered to customers with what is deemed flawed.
Educational_or_student_discount>> Educational or student discounts
This is a price reduction given to members of educational institutions, usually students but possibly also to educators and staff of other institutions. The provider's goal is to build brand awareness early in the life of the buyer, or build a product familiarity so that after graduation the holder is likely to purchase the same product, for own use or for the company, for a normal price. The provider also offers student discounts as a means of offering products within the student budget, which would otherwise be too expensive, resulting in additional sales. An education discount may be provided by the merchant directly, or through a student discount program.
Employee discount
Discounts offered by the company to employees who buy their products.
In 2005, American car makers run "employee discounts" for all customer promotion campaigns to attract buyers, with some success.
Military discount
Discounts are offered to customers who are or are members of military services. Types of military discounts include discounts for active military duties, veterans, retired military personnel, and military or dependent couples. In the United States, military discounts often require proof of ID to demonstrate eligibility such as DD 214 Form, DD 215 Form, or DD 217 Form from each branch of the Armed Forces, TRICARE Card, Veterans Affairs Privileges and Identification Card (USPIC) or official documentation others. Eligibility for a military discount can also be verified online or via mobile phone by a verification company such as SheerID.
Age related discount
Toddler discount, child discount, child discount
Discounts, or free services, are offered to children younger than a certain age, usually for entry into entertainment and attractions, restaurants, and hotels. There may be a requirement that the child be accompanied by an adult who pays the full price. Young children often travel freely by public transport, and older ones can pay a very low price; proof of age may be required.
Young people's discount
Discounts are sometimes offered to young people under a certain age who are neither children nor in education.
Senior discount
Discounts offered to customers who are above a relatively advanced age, usually round numbers like 50, 55, 60, 65, 70, and 75; Appropriate age varies in various cases. The reason for the senior discount offered by the company is that the customer is assumed to retire and live on a limited income, and may not be willing to pay the full price; sale at a discounted price is better than no sales. Non-commercial organizations may offer concessional pricing as a matter of social policy. Free travel or reduced rates are often available for older people (see, for example, Freedom Pass). In the United States, most wholesale stores offer senior discounts, starting for those aged 50 years or more, but most discounts are offered for those over the age of 60.
Special pricing is offered to sellers' friends
The discounted price offered to friends from salespeople, an attitude paraded in the stereotype of a salesman who says "It costs [like this and that], but to you..." In Australia, New Zealand, and England, friends are known as "pairing" rates. "In France, this discount is known as prix d'ami In Spain, this is known as" precio de amigo "in Spanish, or" preu d'amic "in Catalan.In German the term" Freundschaftspreis "is usually used.
Special rates are offered to locals
Discounts often occur in tourist destinations. In Hawaii, for example, many tourist attractions, hotels and restaurants charge very cheaply to someone who shows evidence that they live in Hawaii; this is known as "Kama'aina discount," after Hawaiian word for parent or native. It is also known outside of Hawaii but on the Hawaiian islands as residents discount.
Discount card
Sometimes a document, usually a plastic card similar to a payment card, is issued as a proof of eligibility for a discount. In other cases, existing documents proving status (as student, disabled, resident, etc.) are accepted. Documentation may not be required, for example, for people who are clearly young or old enough to qualify for age-related discounts. In some cases, cards may be issued to anyone who asks.
Coupon
Discount, either from certain specified amount or percentage to the voucher holder, usually with certain conditions. Generally, there are restrictions to other discounts, as they apply only if a certain amount is purchased or only if the customer is older than a certain age. Coupons are often printed in newspapers, brochures, and magazines, or can be downloaded from the internet.
Rebates
Partial refund of sometimes the full price of the product after purchase, although some rebates are offered at the time of purchase. Certain cases are the promise of a full refund if applied within a limited date range of several years in the future; the hope is that the promise will entice customers and increase sales, but the majority will fail to meet the requirements for legitimate claims.
More
- Promotional salary - This is a price reduction given to the buyer to perform some promotional activities. This includes allowance for creating and maintaining in-store display or co-op advertising allowances.
- Brokerage allowance - From a manufacturers point of view, any broker fees paid are similar to promotional allowances. Usually based on the percentage of sales generated by the broker.
Maps Discounts and allowances
See also
- Clean 30
- Ticket system
References
Further reading
- Shell, Ellen Ruppel, Inexpensive: High Cost of Discount Culture , New York: Penguin Press, 2009. ISBNÃ, 978-1-59420-215-5
Source of the article : Wikipedia
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