When would it be beneficial to choose one discount instead of the other? (Single trade discount versus trade discount series)I am trying to do a...

The advantages or disadvantages of trade discounts will be
different for the buyers. I will discuss here theses benefits and limitations of the two
types of discounts from he viewpoint of the seller.

The
most obvious advantage of single trade discount over the multiple trade discount is its
simplicity. The single trade discount is easy to calculate and does not require
additional record keeping effort for obtaining data for its
calculation.

However, the biggest advantage of multiple
discount is that it enables the seller to offer different levels of discount to the
buyers in line with the company's cost structure and attractiveness of business of
buyer. This kind of discount structure, is better able to motivate buyers in ways that
benefit both the buyers and the sellers. For example, a discount for cash payment rather
than credit, enables a buyer with ready cash to reduce its cost. It the same time it
enables seller to reduce its working capital requirements. Similarly, a flat discount on
sales price makes no distinction between the profit potential of small and big buyers.
In contrast a multiple discount, linked to different levels of total purchase volume,
permits extension or higher total discount to high value
customers.

Some people think that multiple discount enables
a seller to trick buyer into believing that the discount given is higher than the real
discount. For example, a discount advertised as 25+20 percent makes it appear like a
total discount of 45 percent. However, in reality the first discount of 25 percent is
calculated on the full price, and the second discount of 20 percent is calculated on the
remaining 75 percent of price after first discount. This result in real discount of 40
percent. However,the effectiveness of this tactics is really
questionable.