Trade Discounts

Wholesale houses usually invoice their goods to retailers at list

prices. List prices were once upon a time supposed to be retail prices,

but of late a system of long list prices has come into vogue in many

lines of trade--that is, the list price is made exorbitantly high, so

that wholesalers can give enormous discounts. These discounts, whether

large or small, are called trade discounts, and are usually deducted at

a certain rate per cent from the face of invoice.



The amount of discount generally depends upon size of bill or terms of

settlement, or both. Sometimes two or more discounts are allowed. Thus

30% and 5% is expressed 30 and 5 meaning first a discount of 30% and

then 5% from the remainder.



30 and 5 is not 35% but 33-1/3%. 10, 5 and 3 off means three successive

discounts.



A wholesale house allowing 10, 5 and 3 off gets more for its goods than

it would at 18 off.