Trade discount

A trade discount is a reduction from a supplier's list price offered to business customers. It may reflect the customer's role, purchasing volume or agreed terms and differs from a discount specifically offered for early payment.

The discount is commonly expressed as a percentage off a published price, but the resulting net price is what matters for comparison. A supplier might offer different discounts to distributors and retailers because they perform different functions or commit to different volumes. Multiple discounts may be applied sequentially rather than simply added together.

For example, a 20% trade discount reduces a £100 list price to £80 before any separately stated taxes or delivery costs. If a further 10% discount applies to £80, the result is £72, not £70. A volume discount is specifically linked to purchasing scale, whereas a trade discount need not be.