What is a discount in business?

business.gov.au's glossary describes a discount as a cut to the full price of a good or service, and gives a cut made during a sale or promotion its own name, a mark-down. Its pricing guide gives attracting new customers, selling unwanted stock and encouraging repeat business as reasons to discount, names special offers, bundles, quantity discounts, value-add offers and seasonal sales as common kinds, and warns that discounts can affect the bottom line. It suggests planning how and when to use them so they still cover your costs.

Its guidance on improving cash flow suggests encouraging upfront or early payment with discounts, and its guide to managing cash flow mentions committing to regular orders to get a bulk discount from a supplier. On displaying prices, the pricing guide says price comparisons, including was and now prices, must be truthful, clear and not misleading.

• Typing a lower price over the full price, so the books never show how much was given away in discounts.
• Leaving an early payment discount unrecorded, so the customer's account shows a small balance that will never be paid.
• Offering discounts without checking that the reduced price still covers the cost of the sale.