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Allowances are the type of reduction from the list price. It also refers to promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way. For example, trade-in allowances are price reductions given for turning in an old item when buying a new one. Trade-in allowances are most common in the automobile industry but are also given for other durable goods. Promotional allowances are payments or price reductions to reward dealers for participating in advertising and sales support programs.

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