As discussed in part 1 of our series on the evolution of pricing, Cash Discount is a pricing model for businesses to recoup costs.
A cash discount is a widely used term in business. As the name suggests, it refers to a business offering an incentive as a discount for cash transactions. This discount is usually a percentage of the total price of the product or service. In this blog post, we will discuss the origin of cash discounts and the difference between non-cash adjustments and cash discounts.
The Problem with Non-Cash Adjustments
In its early stages, a popular product called “Cash Discount” applied a charge to non-cash transactions and waived it if cash was used. This program lacked clarity and has since been defined. Today, a “Non-Cash Charge” is considered a surcharge and must follow the rules associated with surcharging programs.
Cash Discount
As previously explained, a cash discount refers to a business offering an incentive in the form of a discount for cash transactions. A business with a cash discount will always list the non-discounted price on its shelves, signifying a true discount for using cash.
