Discounts and allowances

Discounts and allowances are when the price of goods or services is made lower. Discounts and allowances can be a change of the price that the manufacturer sells the product for, 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). The market price (also called effective price) is the amount that the customer pays. The purpose of discounts is to increase short-term sales, move out-of-date stock, reward valuable customers, encourage distribution. Some discounts and allowances are forms of sales promotion.