What Is a Quantity Discount?

Quantity discount (Q uantit y Discount) is a price discount provided when the buyer purchases a larger quantity. A typical example is to buy less than 100 pieces for a unit price of $ 10, and to buy 100 pieces or more for $ 9 each. The law stipulates that the quantity discount must be equal to all customers, but the amount of discount cannot exceed the cost saved by the seller due to mass sales. These costs include sales, storage, and transportation costs. Discounts spur customers to buy more products from one seller, instead of having to buy across multiple channels in a decentralized manner. ^[1]

Quantity discount

Right!

Quantity discount (Q uantit y Discount) is a price discount provided when the buyer purchases a larger quantity. A typical example is to buy less than 100 pieces for a unit price of $ 10, and to buy 100 pieces or more for $ 9 each. The law stipulates that the quantity discount must be equal to all customers, but the amount of discount cannot exceed the cost saved by the seller due to mass sales. These costs include sales, storage, and transportation costs. Discounts spur customers to buy more products from one seller, instead of having to buy across multiple channels in a decentralized manner. ^[1]

Quantity discount can be divided into

(1) Cumulative quantity discount

Cumulative quantity discounts are price concessions granted for cumulative purchases exceeding a specified quantity or amount within a certain period of time. The purpose is to encourage customers to establish long-term fixed relationships with supermarkets and reduce the operating risks of supermarket stores. The key to quantity discounts is to reasonably determine the starting point of the discount, the discount grade and the discount rate of each grade. For example, the company stipulates that the cumulative purchase amount reaches 1,000 sets, with a price discount of 4%; it reaches 2,000 sets, a discount of 5%; and over 3000 sets, a 6% discount. Cumulative quantity discounts are helpful to stabilize customers and encourage customers to buy frequently and long-term. This discount is especially applicable to long-term trading products, large-volume sales products, and products with relatively stable demand.

(2) One-time quantity discount

Also known as "non-cumulative quantity discount", it is a price concession for a purchase that exceeds the specified quantity or amount. The purpose is to encourage customers to increase the purchase amount of each order, so that supermarket stores can organize large-scale purchases and obtain price advantages. This method only considers each purchase, regardless of the cumulative purchase. For example, the company stipulates that when buying 100-200 pieces at a time, a 10% discount will be made on the list price, a 15% discount will be provided for more than 200 pieces, and no discount will be given for less than 100 pieces. The one-time quantity discount is more suitable for the sale of short-term trading products, seasonal products, sporadic trading products, and obsolete, slow-moving, perishable, and vulnerable products. The one-time quantity discount can not only encourage customers to purchase in large quantities, but also help save sales, storage and transportation costs, and promote more and faster sales of products. The one-time quantity discount calculation is simple and convenient, which is beneficial to the daily operation of SMEs.