Business Mathematics and Basic Statistics · Ch 13 — Billing Discount and Average Billing Date
Trade (Billing) Discount and Net Price
Trade (Billing) Discount and Net Price
When a seller bills a customer, the price printed on the price list — the list price (also called the catalogue or marked price) — is often reduced by a trade discount (also called a billing discount) before the customer actually has to pay. This chapter, part of the WBCHSE Class 12 Commerce Business Mathematics and Basic Statistics syllabus, covers two commercial-arithmetic techniques built around billing: computing discounts on an invoice, and finding the single representative date for a series of billed amounts due on different dates.
Key Notation
= list price (the price before any discount), = the rate of trade discount allowed, and = net price (the actual amount the customer pays, after the discount).
A trade discount is simply a percentage reduction applied to the list price:
Net Price After a Single Trade Discount
and the discount amount itself is .
This is exactly the same percentage-reduction idea already met in earlier chapters of this syllabus (for instance, computing a tax-inclusive or tax-exclusive price); here it is applied specifically to a seller's invoice.
The price of goods as printed on a price list or catalogue, before any trade discount is deducted.
A percentage reduction allowed by a seller on the list price when billing a customer, usually to encourage bulk purchase or maintain a trade relationship.
The actual amount a customer pays after a trade discount has been deducted from the list price: .