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Many are price discrimination methods that allow the seller to capture some of the consumer surplus.
The most common types of discounts and allowances are listed below.
Trade-in credit, also called trade-up credit, is a discount or credit granted for the return of something.These discounts are intended to speed payment and thereby provide cash flow to the firm. Some retailers (particularly small retailers with low margins) offer discounts to customers paying with cash, to avoid paying fees on credit card transactions.Similar to the Trade discount, this is used when the seller wishes to improve cash flow or liquidity, but finds that the buyer typically is unable to meet the desired discount deadline.Discounts and allowances are reductions to a basic price of goods or services.They can occur anywhere in the distribution channel, modifying either the manufacturer's list price (determined by the manufacturer and often printed on the package), the retail price (set by the retailer and often attached to the product with a sticker), or the list price (which is quoted to a potential buyer, usually in written form).