Quantity Discount

AAA

DEFINITION of 'Quantity Discount'

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Raw Materials

    A material or substance used in the primary production or manufacturing ...
  2. Inventory

    The raw materials, work-in-process goods and completely finished ...
  3. Discount

    The condition of the price of a bond that is lower than par. ...
  4. Inventory Turnover

    A ratio showing how many times a company's inventory is sold ...
  5. Cost Of Goods Sold - COGS

    The direct costs attributable to the production of the goods ...
  6. Carrying Cost Of Inventory

    This is the cost a business incurs over a certain period of time, ...
RELATED FAQS
  1. What profit margin is average for a company in the electronics sector?

    Many industries practice price discrimination, including the entertainment industry, the consumable goods industry and the ... Read Full Answer >>
  2. What is the average debt/equity ratio of companies in the electronics sector?

    Companies benefit from price discrimination because they can capture 100% of the available consumer surplus, entice consumers ... Read Full Answer >>
  3. How has electronic retailing (e-tailing) changed the consumer discretionary goods ...

    Electronic retailing has changed the consumer discretionary goods sector by increasing price transparency and product information. ... Read Full Answer >>
  4. Is good customer service something to look for in a company in which I am considering ...

    Investors should consider good customer service before buying a stock especially in consumer-oriented sectors. Customer service ... Read Full Answer >>
  5. How does stock evaluation of an electronic retailing (e-tailing) business differ ...

    Stock evaluations of electronic retailers differ from brick-and-mortar businesses in that e-tailers have higher growth rates. ... Read Full Answer >>
  6. Why did Target's (TGT) expansion into Canada fail so quickly?

    Target (TGT) decided to expand north into Canadian markets in 2011. By 2013, it had built 133 stores across several Canadian ... Read Full Answer >>
Related Articles
  1. Entrepreneurship

    Six Steps To A Better Business Budget

    This easy but essential process helps owners ensure that their businesses can stay afloat.
  2. Fundamental Analysis

    Measuring Company Efficiency

    Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period.
  3. Markets

    A Look At Corporate Profit Margins

    Take a deeper look at a company's profitability with the help of profit margin ratios.
  4. Stock Analysis

    Top Investment Ideas for Malls of the Future

    How investors should be thinking about the mall of tomorrow.
  5. Stock Analysis

    Whole Foods: How Will Shares React to Price Probe?

    Why it's important to look beyond the recent headlines about Whole Foods Market and accusations of pricing problems in New York.
  6. Stock Analysis

    What's Worth More: Walmart or Facebook?

    Which company is worth more, Walmart or Facebook? The answer may come as a surprise.
  7. Personal Finance

    Is Etsy The New And Improved Ebay?

    Will Etsy replace Ebay as the place for young, trendy millennials to shop?
  8. Economics

    Explaining Business-to-Consumer

    Business-to-consumer (BtoC or B2C) is a business model whereby a company sells its products directly to consumers.
  9. Stock Analysis

    Who's The Stronger Stock: Amazon or eBay?

    Learn how revenue, profitability, valuation metrics, active user base and seller ratings measure the success of Amazon and eBay.
  10. Active Trading Fundamentals

    How To Short Amazon Stock

    With the stock reaching all-time highs and the company gambling on several new business lines, many investors may feel it's a good time to short sell Amazon.

You May Also Like

Hot Definitions
  1. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  2. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  3. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  4. Current Account Deficit

    A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services ...
  5. International Monetary Fund - IMF

    An international organization created for the purpose of: 1. Promoting global monetary and exchange stability. 2. Facilitating ...
  6. Risk-Return Tradeoff

    The principle that potential return rises with an increase in risk. Low levels of uncertainty (low-risk) are associated with ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!