A trade discount is a reduction off the published list price that a seller offers to another business in the distribution channel, such as a wholesaler, distributor, or retailer, rather than to an end consumer. It is usually expressed as a percentage and reflects the buyer’s role, order volume, or the seller’s expectation that the buyer will resell the goods. Unlike a cash discount, it is not tied to how quickly the invoice gets paid.
How it works
The seller starts from the list price and applies the agreed percentage. A 30 percent trade discount on a $100 item means the business buyer pays $70. Trade discounts are commonly negotiated by tier, so a small retailer might get 20 percent while a large distributor gets 40 percent. The discount typically does not appear as a line item on the invoice. Instead, the net price is shown, since the list price is treated as a reference rather than the amount actually charged.
Why it matters
Trade discounts let a single price list serve very different buyers without publishing separate catalogs. They protect margin for resellers, reward volume, and keep pricing consistent across a channel. For accounting, only the net amount is recorded, so the discount itself is not booked as an expense.
On Shopify
Shopify’s default pricing is built for consumers, so applying role based or tier based trade discounts usually means B2B catalogs, customer tags, or manual quoting. When a wholesale buyer requests pricing, you can apply their trade discount inside a quote, then convert it to a draft order that carries the net price into native checkout. That keeps the discounted amount tied to the specific buyer rather than exposed to everyone. See the B2B quoting glossary for related terms like list price and volume discount, or pricing for plan details.