Pocket prices are the prices charged by a company to its retail partners for products that are sold in brick-and-mortar stores. The pocket price is generally lower than the MSRP, and the difference between the two is known as the "trade discount." A pocket price waterfall is a tool businesses use to determine the optimal price reduction for their products. The analysis begins with the retail price, then adjusts the price downward based on various factors, such as the cost of goods sold, desired pocket margin, and competitor pricing.