Price Markups and Discounts

The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.

Price Markups and Discounts

 

a component part of any commodity price, intended to compensate for handling costs and ensure a profit to trade and marketing enterprises.

In the USSR there are several types of markup and discount. These include commercial and wholesale discounts off retail prices, which vary with commodity type and with place of sale (city, countryside, or region of the Far North); discounts on products to be used in production and construction that are sold at f.o.b. destination prices, with the discounts calculated on wholesale prices; markups imposed by public catering enterprises, which differ for each of the four categories of such enterprises; markups or discounts off wholesale prices that aid the supply, marketing, and stockpiling organizations that operate under the USSR State Committee for material and Technical Supply and under various other ministries and departments; and markups on wholesale prices for goods such as mineral fertilizers and farm machinery sold by the Soiuzsel’khoztekhnika (All-Union Board for the Supply of Farm Machinery, Fuel, and Fertilizers) agency to kolkhozes and sovkhozes.

Price markups and discounts are ordinarily computed as percentages of the retail or wholesale prices of goods; only on certain commodities do they represent an absolute amount per unit. In foreign socialist countries, markups and discounts are generally similar to those in the USSR and are applied to all categories of prices. The actual scale of markups and discounts is regulated either by price lists or by directives issued by price formation agencies.

In the capitalist countries, price markups and discounts are also used extensively by companies and individual entrepreneurs in negotiating terms of commercial sales, frequently corresponding to order size. The scale of such discounts may vary with market conditions. In many countries including the USSR, discounts are employed in retail trade during clearance sales.

The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.