Page 26 - LESSON 2: DISCOUNTS AND COMMISSIONS

Manufacturers, like the book publishers, produce and publish books. The manufacturers
sell books to wholesalers like the National Bookstores, Alemar's, Goodwill, etc. who in turn sell

the books to retailers or the consumers.

Producers or wholesalers usually sell goods at discounts. This practice is used to induce

customers to buy goods in big quantities. Thus, a retailer or a wholesaler can make a profit by
buying goods at lower prices (through discounts) and selling them at higher prices or prices

suggested by the producers.

Terms to remember:

1. List price - the price at which an item is offered for sale to the customer.
2. Discount - is an amount deducted from the list price. It is often expressed as a certain percent

of the list price.
3. Trade discounts - are discounts given by manufacturers to wholesalers, or by wholesalers

to retailers.
4. Retail discounts- are discounts given by retailers to consumers.

5. Net price- is what the buyer pays for the goods. It is the price obtained after deducting the

discount from the list price.

A. TRADE DISCOUNTS

Businessmen want to sell more in greater volumes and develop an established client or
"suki". They do this by offering trade discounts.

A discount is a reduction in the price offered by one business to another business. This
discount is normally given by manufacturers to wholesalers, or by wholesalers to a retailer. Thus,

a book publisher offers a discount to retail bookstores or other outlets because these stores are in

the trade.

B. COMPUTING SINGLE TRADE DISCOUNTS

Problems in discounts, similar to our percentage of problems, involve the following
elements:

1. the percentage, which is the amount of discount.
2. the rate, which is the percent or rate of discount.

3. the base, which is the amount on which the discount is computed.

Page | 4 BUSINESS MATHEMATICS: MODULE 2