Discounts and allowances

Discounts are reductions applied to the basic sale price of goods or services.

Allowances against price may have a similar effect Discounting practices operate within both business-to-business and business-to-consumer contexts.

There are many purposes for discounting, including to increase short-term sales, to move out-of-date stock, to reward valuable customers, to encourage distribution channel members to perform a function, or to otherwise reward behaviors that benefit the discount issuer.

The discount then enables the retailer to charge the end customer the list price and cover its own costs/profit.

These discounts are intended to speed payment and thereby provide cash flow to the firm.

This provision generated a shortfall in taxation revenue and also meant that UK practices were not in line with the EU's VAT Directive of 2006, which specified that value added tax was to be levied on the actual price paid, so proposals were put forward in the budget of 2014 to amend the law in this respect.

Sellers like this as the discount granted is not just "given for free" and makes future price/value negotiations easier.

Iyengar and Jedidi note the popularity of quantity discounts being offered to both business purchasers and consumers.

Some websites may also offer other perks for students, such as free cancellations or additional loyalty points.

In 2005, the American automakers ran an "employee discount" for all customers promotional campaign in order to entice buyers, with some success.

In the United States, military discounts frequently require proof of ID to show eligibility such as a DD Form 214, DD Form 215, or DD Form 217 from any branch of the Armed Forces, TRICARE Cards, Veterans Affairs Cards Uniformed Services Privilege and Identification Cards (USPIC) or other official documentation.

Eligibility for military discounts can also be verified online or via mobile by verification companies.

A discount, or free service, offered to children younger than a certain age, commonly for admission to entertainments and attractions, restaurants, and hotels.

Small children often travel free on public transport, and older ones may pay a substantially discounted price; proof of age may be required.

Discounts are sometimes offered to young people below a certain age who are neither children nor in education, for example:

In the United Kingdom, the "Blue Light Card" is an example of a discount scheme available to staff working for emergency services, the NHS, social care providers and the armed forces.

In Hawaii, for example, many tourist attractions, hotels, and restaurants charge a deeply discounted price to someone who shows proof that they live in Hawaii; this is known as a "Kama'aina discount," meaning child of the land or a local resident.

Documentation may not be required, for example, for people who are obviously young or old enough to qualify for age-related discounts.

Coupons are associated with Sunday circulars and help consumers who struggle to make ends meet.

Commonly, there are restrictions as for other discounts, such as being valid only if a certain quantity is bought or only if the customer is older than a specified age.

A particular case is the promise of a refund in full if applied for in a restricted date range some years in the future; the hope is that the promise will lure customers and increase sales, but that the majority will fail to meet the conditions for a valid claim.

From the point of view of the manufacturer, any brokerage fee paid is similar to a promotional allowance.