Strategic Pricing Quantity Break Schedule

Strategic Pricing Quantity Break Schedule

For most wholesale distributors and manufacturers it is common to offer pricing discounts based on the quantity of an item purchased. For example, a single widget might sell for $10 but an order of 20 widgets might be priced at $9 each.

Our pricing consultants see many companies that have set clear structures in place by which to guide discount offerings. Purchases of 1-9 units might be priced at $10 while purchases of 10-19 units would be priced at $9. The problem our pricig experts see lies in the enforcement of such pricing discount schedules.

Take for example the company with $15 million in revenue who is leaking $700,000 in price and margin just because they are not adhering to their discount schedule. Exceptions become the rule and an analysis reveals that most customers are getting a deeper break on the discounts. So, the purchase described above of 1-9 units should be in effect paying list price at $10 but instead is only paying $9.

Containing quantity discount break point management can drive a significant amount of margin. Often, there is no need for adjusting the break points but simply adhering to the schedule that is already in place.

About the Author

Ralph Zuponcic

President, PricePoint Partners

Ralph is a national authority on strategic pricing. He has been featured in publications including The Wall Street Journal, Fortune Small Business, CFO Magazine and Marketing News.

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