Price Discounts and Allowances: Most companies will modify their basic price to reward customers for such acts as early payment, volume purchases and off-search buying. These price adjustment – called discounts and allowances can be of various types such as:-
Cash Discounts: A cash discount is a price reduction to buyers who promptly pay their bills. Such discounts, serve the purpose of reducing the sellers liquidity and reducing credit-collection cost and bad-debts.
Quantity Discount: A quantity discount is a price reduction to buyers who buy large volumes. Quantity discounts must not exceed the.
Cost savings to the seller associated with selling large quantities. These savings include reduced expense of selling, inventory and transportation.
Functional discounts:- functional discounts are offered by the manufacturers to trade channel members if they will perform certain functions such as storing and record keeping.
Seasonal discounts:-a seasonal discounts is a price reduction to buyers who buy merchandise or service out of season. Seasonal discounts allow the seller to maintain steadier production during the year.