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    Discount Rate

    A discount rate is an amount or percentage that a merchant or business takes off of an original product price to win consumers’ business and loyalty.

    What Is a Discount Rate?

    In ecommerce, a discount rate can occur at a number of different steps throughout the supply chain. Brands can give discounts to warehouses and other inventory management solutions. Manufacturers can give discounts to retailers. And retailers can give discounts to consumers.

    At each of these stages — and more — discounts give the consumer an incentive for partnering with the discount-giving entity now and in the future. Businesses determine the appropriate discount rate, which is typically an amount or percentage off the original price, by balancing their profit margin with the cost of retaining the consumer.

    Many retailers or brands give discounts for different kinds of consumer engagement, as well. A business might increase a discount rate for every referral the consumer makes, for example, or for every testimonial they provide. Others might offer one discount rate for a single purchase, but an increased rate for a bundled purchase.

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