What is a ‘Quantity Discount’
A quantity discount is an incentive offered to a buyer that results in a decreased cost per unit of goods or materials when purchased in greater numbers. A quantity discount is often offered by sellers to entice buyers to purchase in larger quantities. The seller is able to move more goods or materials, and the buyer receives a more favorable price for the goods. At the consumer level, a quantity discount can appear as a BOGO (buy one, get one discount) or other incentives such as buy two, get one free.
Explaining ‘Quantity Discount’
Retailers often get better deals if they order more of the same item. For example, the cost per unit for t-shirts might be $7.50 per unit if less than 48 pieces are ordered; $7.25 per unit if 49-72 pieces are ordered; or $7.00 per unit if 73 or more pieces are ordered. Depending on the quantity discount, all pieces ordered must be delivered and paid for by a certain date, or the purchases and payments can be spread out over a specified period of time.
Further Reading
- Comment on: a generalized quantity discount pricing model to increase supplier's profits – search.proquest.com [PDF]
- A quantity discount pricing model to increase vendor profits – pubsonline.informs.org [PDF]
- A quantity discount model for coordination of internet-based hybrid channels [J] – en.cnki.com.cn [PDF]
- Vendor-Purchaser Coordination and Quantity Discount Pricing Model in Supply Chain [J] – en.cnki.com.cn [PDF]
- Note—Comments on “A quantity discount pricing model to increase vendor profits” – pubsonline.informs.org [PDF]
- Coordination contracts in the presence of positive inventory financing costs – www.sciencedirect.com [PDF]
- Supply chain coordination with trade credit and quantity discount incorporating default risk – www.sciencedirect.com [PDF]
- Supply chain coordination with defective items and quantity discount – www.tandfonline.com [PDF]
- Buyer–vendor coordination for fixed lifetime product with quantity discount under finite production rate – www.tandfonline.com [PDF]
- Quantity discount versus lead time-dependent discount in an inter-organizational supply chain – www.tandfonline.com [PDF]
