is an allowance made by manufacturers and jobbers from their list or
marking prices. When the market varies, they change the discount
accordingly, or make several discounts instead of changing the list.
Trade discount is a certain per cent off, or from list or marking price;
while profit and loss is computed on the cost or purchase price.
The amount of the discount allowed depends sometimes upon the amount of
order, and sometimes upon the terms of settlement. Very often two or
more discounts are deducted in succession. Thus, 10% and 5% off; or, as
it is generally expressed in business, 10 and 5 off, means a discount
of 10%, and then 5% from what is left; 20, 10, and 5 off, means three
successive discounts. A retailer’s profit is smaller when he is allowed
10 and 5 off, than if he were allowed 15 off. The result is not affected
by the order in which the discounts are taken.
EXAMPLE: I receive a bill of goods amounting to $100, 20% off. What is
the net cost?