Few customers actually pay the headline price. Every pricing system distinguishes between the list price, the published or retail price set by the seller, and the net price, the amount the customer actually pays after discounts, rebates, and adjustments. A discount is a reduction from the list price offered to certain customers or under certain conditions, and the catalog of discount types is broad. A trade discount is offered to channel partners such as wholesalers or retailers off the list price. Quantity discounts reward volume: cumulative or loyalty quantity discounts grow as total purchases over a period accumulate, while non-cumulative quantity discounts apply only to a single large order and do not carry forward.
Other discounts serve specific strategic purposes. A cash discount, often written as "2/10 net 30," rewards buyers who pay quickly. A seasonal discount is offered during off-peak periods to stimulate demand, and a promotional or sales discount is a temporary reduction used to drive short-term sales or clear inventory. A rebate is a partial refund returned to the buyer after the purchase has been completed, rather than a reduction at point of sale. An allowance is a price reduction granted in exchange for performing a specific activity, such as promoting or displaying the product. Discounts are typically customer-initiated offers; a markdown, by contrast, is initiated by the seller to lower the original price, typically for clearance.
Manufacturers and governments can also impose price controls. MSRP, or Manufacturer's Suggested Retail Price, is the price a manufacturer recommends a retailer charge. MAP (Minimum Advertised Price) goes further: it is the lowest price a retailer is allowed to advertise for a product, even if they are willing to sell for less. The difference is that MSRP is merely a suggestion, while MAP is a contractual floor on advertised prices. At the regulatory level, a price floor is a minimum legal price below which a product cannot be sold, and a price ceiling is a maximum legal price above which it cannot legally be sold. When a price ceiling is set below the equilibrium price, quantity demanded exceeds quantity supplied and a shortage develops. When a price floor is set above the equilibrium price, a surplus emerges because producers want to sell more than buyers want to buy.