January 26, 2022


Accounting + Finance Blog

Meaning of discount and key explanations

Meaning of discount and key explanations

Discounts are also referred to as coupons. Many businesses give a discount to increase the impetus of customers to buy more. We have discussed trade discounts. In this article, however, the focus is on the term discount. Let’s begin!

What is a discount?

It is a reduction in the selling price of goods or services.

It can also be defined as an allowance of the bid price for a product or service.

Key Explanations

A discount is a reduction or an allowance. Yes, it is generally an allowance. The seller is reducing the price a bit. Therefore, selling the goods less than the original price.

It is given for a reason. Businesses do not give a discount for showoff. There are reasons why it is being provided. A trade discount is provided to allow the buyer to sell and make a profit.

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A cash discount is given to encourage customers who have bought goods on credit, to pay early to reduce default risk. Whereas, the seasonal discount is provided during festive periods like Easters and Christmas time.

Discounts are stated as a percentage. It is stated at a percentage. For example, 2 percent off a product that is sold for 30,000 Naira means the seller will sell the goods for 29,400 Naira.

E-discounts platforms like Amazon and Jumia are known to provide a huge discount during certain periods in a year. There is the Jumia anniversary which usually takes place between June and July. Amazon prime and black Fridays are periods for huge discounts.

Also, this e-commerce company sells coupons. This coupon is used to allow their customers to buy products at a reduced price.

A wrap

Discounts are percentages to reduce the price of products and services. One important discount is a cash discount. The next article on business terms will discuss it.