Your pricing strategy might include discounts to customers who offer you a business benefit.
You may offer cash discounts to customers who pay promptly. This rewards those who help your company maintain a steady, positive cash flow and reduce credit-collection costs.
Offering quantity discounts for large orders often makes economic sense when the cost-per-unit to sell or deliver a product declines as the quantity increases. For example, a caterer might fill an order for 12 dozen cupcakes for one customer at 10 cents each, while cupcakes sitting in the bakery display rack might be sold to several customers throughout the day for 20 cents each. This is because the possibility that some of the cupcakes won't sell has to be taken into account. There are costs associated with having the store open for random customers' convenience.
Seasonal discounts given to buyers who purchase during a product's slow season reward customers who essentially assist a company in balancing its cash flow and in meeting production demands.
Trade-in allowances for returned old products that you may either re-use or re-sell for a profit may benefit both a company and customers.
Promotional allowances often make economic sense. For example, if your product is sold by a retail chain which includes your product in its ads or in promotional activities, those activities leverage your marketing efforts. If so, you might choose to discount your price to this retail chain.
