Determining the Trade-Discount Rate
Introduction
If the list price and the net price are both known, the trade discount rate can be easily determined.
It is calculated as the amount of the discount of an item expressed as a percentage of the list price.
Trade-Discount Rate = Trade Discount ÷ List Price
Example
Wholesalers lists a super freezer engine in its catalog for $399. The net price to the
retailer, Zoho Appliances, is $250. What is the trade-discount rate?
Answer:
- Find the trade discount. Trade Discount = List Price - Net Price = $399 - $250 = $149
- Find the trade-discount rate. Find the trade-discount rate = Trade Discount / List Price = $149 / $399 = %37.34
Practice: Find the trade discount and the trade-discount rate. Round to the nearest hundredth percent.
Trade Discount and Net Price
| List Price | Net Price | Trade Discount | Trade Discount Rate |
| $150.00 | $120 | ??? | ??? |
| $450.00 | $400 | ??? | ??? |
| $550.00 | $500 | ??? | ??? |
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Date of last modification: March 5, 2019