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Generally there are two types: Cumulative quantity discounts, also called accumulation discounts, are price reductions based on the quantity purchased over a set period of time.

The expectation is that they will impose an implied switching cost and thereby bond the purchaser to the seller.

The rationale behind them is to obtain economies of scale and pass some (or all) of these savings on to the customer.

In some industries, buyer groups and co-ops have formed to take advantage of these discounts.

Cash Discounts are reductions in price given by the creditor to the debitor to motivate the debitor to make payment with in specified time .

This is where the purchaser doesn’t pay for the goods until well after they arrive.Examples of these functions are warehousing and shelf stocking.Trade discounts are often combined to include a series of functions, for example 20/12/5 could indicate a 20% discount for warehousing the product, an additional 12% discount for shipping the product, and an additional 5% discount for keeping the shelves stocked.Sellers like this as the discount granted is not just "given for free" and makes future price/value negotiations easier.Buyers have the advantage of getting some value for something no longer used. These are price reductions given for large purchases.

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