What would be the benefits of offering a single-trade discount versus series?

Expert Answers
pohnpei397 eNotes educator| Certified Educator

I suppose that the main advantages of offering a single trade discount as opposed to the series are two:

First, the single trade discount has the advantage of being simple.  It is very easy to calculate this discount because all you have to do is multiply the percent discount by the price to find the amount of a discount the customer gets.

Second, the single trade discount actually gives the customer a bigger price break for the same apparent percent discount.  A 25% discount on a single trade yields more of a discount than a 10 and 15% discount series, for example.

neela | Student

Suppose a seller gives a discount of d1 at first stage and then d2 .

Then the  net discount = 100- (100--d1)(100-d2)/ 100= 100 - {100 - (d1+d2) +d1d2/100} =  - (d1+d2)+d1d2/100. So the net discount is d1+d2 -d1d2/100. So,

d1+d2  in one single  discount >  giving 2 separate discounts like d1 and d2 which is equal to d1+d2-d1d2/100.

From the above we can see  that instead of giving a single discount d , the seller can to his advantage make it  a multiple didiscount d1 and d2 , but still the total effect is for his (seller's) advantage andnot for the customer.