Describe the difference between a Single Trade Discount versus a Discount Series?
A single trade discount is a one-off benefit extended to the buyer when the individual makes a purchase that meets certain conditions to qualify for the discount. The conditions may include bulk purchasing, cash purchasing, or the items might be sold during a sale promotion. For instance, a seller might extend a 20% discount if the buyer purchases $10,000 or more worth of product. Thus, the discount will only come into effect once the total value purchased meets the discount.
A discount series, on the other hand, is a discount provided through a combination of conditions. In such a transaction, the seller extends different discounts once certain conditions are met. For instance, the seller might extend a sale promotion discount of 10% and a bulk purchase discount (100 items) of 20% on the same item. Thus, if a buyer purchases 20 items they will only get the 10% promotion discount, but if they purchase 110 items, they will get both the 10% sale promotion and the bulk purchase discount of 20%. Thus, 10% will first be deducted from the total value and an additional 20% deducted from the remainder.
A single trade discount is a discount that is given to a customer (usually a wholesaler) when the customer buys a product. The discount is expressed simply as a single discount of a given percentage. For example, a 25% discount on the purchase.
By contrast, a discount series is expressed as a number of separate discounts. For example, a seller could say they were offering three discounts -- one of 10%, one of 8% and one of 7%.
The series discount would sound like it adds up to a 25% discount but it would not actually be as much because each successive discount is taken from a price that includes the previous discount (s).
A discount may be expressed as a single consolidated percentage of the total price, or at may be expressed as a series of discount percentages. When the discount is expressed as a series do discount each successive discount is calculated as a percentage of the net price after application of the previous discounts in the series.
For example let us consider a single discount of 40 percent. In this case product with full price of $100 will be sold at a price of $60 after allowing a discount of 40 percent on full price.
Against this compare a discount of 20% + 10% +10%. In this the net price of a Product with full price of $100 after application of the first discount in the series, which is 20%, will be $80. This second discount in the series which is 10% will be applicable on this net price of $80. Thus the second discount in the series discount will be $8 and net price will be $72. Similarly the amount of discount against final discount of 10% will be $7.2 and final net price will be $64.8. Thus the total discount amount works out to a single discount of 35.2%.
Companies frequently describe the discount structure as series discount make the customers feel that they are receiving more discount than they actually do. Some series discounts are linked to some specific condition of sale being met. For example, in the above example a flat discount of 20% may be given to all the customers. But the customers buying goods worth $1000 may be offered additional discount of 10%, and for customer buying goods worth $2000 or more the third discount in addition to first two may be applicable.