Trade in Allowance

Posted in Marketing and Strategy Terms, Total Reads: 430

Definition: Trade in Allowance

Trade allowance is the reduction is the sales price of a new item when an older item is returned or exchanged.

It is mostly seen for cars, bikes and some home appliances like coolers, air conditioners, mixer etc where a new item is offered at a lower price if the customer brings the old item for return or exchange.

Example: A new mixer costs Rs 3500 and the retailer is willing to give a discount of Rs 300 on this price, so the selling price is Rs3200. Now if the retailer goes for trade in allowance, the estimated cost of old mixer is Rs 500 and the retailer was willing to give a discount of Rs 300 so the final selling price would be Rs 2800.



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