A trade discount is a reduction in the list price of a product offered to a business customer by a supplier or manufacturer. For example, a clothing store may receive a 20% trade discount on all purchases from a particular wholesaler.
Trade discounts are an important part of business-to-business (B2B) transactions. They allow businesses to purchase goods and services at a lower cost, which can increase their profit margins. Trade discounts have been used for centuries. In the early days of commerce, they were often used as a way to reward loyal customers or to encourage bulk purchases.