Calculate net price after single or chain trade discounts. Compute single equivalent discount rate, total savings, and compare discount structures side by side.
Trade discounts are price reductions offered by manufacturers to wholesalers, distributors, or retailers. Unlike consumer coupons, trade discounts are built into the pricing structure and are typically not visible to end customers. They can be a single percentage or a chain (series) of successive discounts, each applied to the already-discounted price.
A chain discount like 20/10/5 does NOT equal 35%. Each discount applies sequentially: first 20% off list, then 10% off the new price, then 5% off that price. This calculator handles single and chain discounts up to five levels, computes the single equivalent discount rate, and shows the step-by-step price waterfall.
Entrepreneurs, finance teams, and small-business owners gain a competitive edge from accurate trade discount data when setting prices, forecasting revenue, or managing operational costs. Save this tool and revisit it each quarter to keep your financial plans aligned with current market realities.
From solo freelancers to mid-market companies, having reliable trade discount data supports stronger negotiations, tighter forecasting, and more confident strategic planning. Modify the inputs above to match your current business conditions and re-run the numbers as often as your market shifts.
From solo freelancers to mid-market companies, having reliable trade discount data supports stronger negotiations, tighter forecasting, and more confident strategic planning. Modify the inputs above to match your current business conditions and re-run the numbers as often as your market shifts.
Chain discounts are deceptively complex — many buyers incorrectly add the percentages together, overstating the actual discount. This tool computes the precise net price, the single equivalent discount, and total dollar savings. It's essential for purchase negotiations, comparing supplier offers, and verifying invoices. Instant recalculation lets you test different assumptions side by side, giving you the confidence to act on data rather than gut instinct.
Net Price = List Price × (1 − d₁) × (1 − d₂) × ... × (1 − dₙ). Single Equivalent Discount = 1 − [(1 − d₁) × (1 − d₂) × ... × (1 − dₙ)]. Total Savings = List Price − Net Price.
Result: $684.00 net price (31.6% equivalent discount)
List price $1,000: After 20% = $800. After 10% = $720. After 5% = $684. Total savings = $316. Single equivalent discount = 1 − (0.80 × 0.90 × 0.95) = 1 − 0.684 = 31.6%. Note this is less than simply adding 20 + 10 + 5 = 35%.
In B2B commerce, chain discounts typically represent different business functions. A manufacturer might offer 30/10/5 to a distributor: 30% for distribution, 10% for volume commitment, and 5% for marketing support. If the distributor doesn't participate in marketing, they only get 30/10. This modular approach lets manufacturers customize pricing without maintaining separate price lists.
Different industries have established norms. Industrial supply: 40/10 or 50/10. Building materials: 30/10/5. Office supplies: 25/15/5. Automotive parts: 35/10. The deeper first discount typically reflects the standard trade discount, while supplementary discounts reward additional services or commitments.
A trade discount is a reduction from the list (catalog) price offered to distribution channel members: wholesalers, distributors, or retailers. It compensates them for functions they perform like warehousing, marketing, and reselling. Trade discounts are deducted before invoicing, unlike cash discounts which apply to payment terms.
Chain discounts let manufacturers differentiate pricing for different functions. The first discount might reward basic distribution, the second rewards volume, and the third rewards prompt payment or promotional support. Each layer can be adjusted independently without changing the others.
No. Mathematically, multiplication is commutative: 20/10/5 gives the same result as 5/10/20 or any other order. The net price is always List × 0.80 × 0.90 × 0.95 = List × 0.684 regardless of sequence.
Calculate the single equivalent discount rate for each offer. For 20/15: SED = 1 − (0.80 × 0.85) = 32%. For 25/10: SED = 1 − (0.75 × 0.90) = 32.5%. The 25/10 offer is slightly better, even though 20 + 15 = 35 appears larger than 25 + 10 = 35.
Trade discounts reduce the list price to determine the invoice price and are deducted before invoicing. Cash discounts (like 2/10 net 30) reward early payment and are applied after invoicing. A buyer might get both: trade discounts determine what they owe, and cash discounts reduce it further if they pay early.
Reverse the formula: List Price = Net Price / [(1 − d₁) × (1 − d₂) × ...]. For example, if the net price is $684 after a 20/10/5 chain, then List = $684 / (0.80 × 0.90 × 0.95) = $684 / 0.684 = $1,000.