Volume Discount

AAA

DEFINITION of 'Volume Discount'

A financial incentive for individuals or businesses that purchase goods in multiple units or in large quantities. The seller or manufacturer rewards those buying in bulk by providing a reduced price for each good or group of goods. Volume discounts allow businesses to purchase additional inventory at reduced cost, and allow sellers or manufacturers to reduce inventory by selling more units to incentivized buyers.

INVESTOPEDIA EXPLAINS 'Volume Discount'

Volume discounts allow buyers to purchase goods at a discounted rate. These savings are often passed on to consumers. For example, Wal-Mart is able to purchase such large quantities of each particular good that it routinely receives volume discounts from its vendors. Wal-Mart's customers, in turn, are able to purchase these goods for less money than if they went to a store that did not buy in such great volume. Volume discounts are often tiered; that is, a specific discount is applied to X number of units. The discount increases as the number of units is increased.


Some brokerage firms offer volume discounts on commissions charged depending on the level of investment or trading activity.

RELATED TERMS
  1. Customer

    An individual or business that purchases the goods or services ...
  2. Consumer Goods

    Products that are purchased for consumption by the average consumer. ...
  3. Vendor Note

    A type of debt instrument used in a particular type of short-term ...
  4. Vendor Financing

    The lending of money by a company to one of its customers so ...
  5. Accounts Receivable - AR

    Money owed by customers (individuals or corporations) to another ...
  6. Fast-Moving Consumer Goods (FMCG)

    These are consumer goods products that sell quickly at relatively ...
RELATED FAQS
  1. Who are Whole Foods' (WFM) main competitors?

    Whole Foods' (WFM) main competitors are Sprouts (SFM) and Trader Joe's. However, Whole Foods strategy — convincing people ... Read Full Answer >>
Related Articles
  1. Economics

    Understanding The Consumer Confidence Index

    We look at this closely watched economic indicator to see what it means and how it's calculated.
  2. Options & Futures

    The Consumer Price Index: A Friend To Investors

    As a measure of inflation, this index can help you make key financial decisions.
  3. Budgeting

    The Dark Side Of Bulk Buying

    Find out why getting more for less isn't always a great deal.
  4. Savings

    20 Ways To Pay Less At Costco

    There are plenty of little-known Costco shopping hacks that can save you big bucks at the register, and help you avoid the notorious spending hangover.
  5. Stock Analysis

    Costco, Target or Walmart: Which is the Best Bet?

    These three retailers have all been long-term winners. It that likely to continue? If so, which is the best bet?
  6. Stock Analysis

    Is There Any Upside Left in Costco?

    Costco's stock has performed exceptionally well over the past five years, but does it need a breather?
  7. Mutual Funds & ETFs

    Consumer Staples Defend against Volatility

    Volatility has crept back into the market, but consumers can defend against price swings by investing in consumer staples.
  8. Personal Finance

    How To Shop At Wholesale Retailers

    Have a plan and think twice before you venture through the sliding glass doors.
  9. Savings

    How To Get Gift Cards At A Discount

    Use these tips whether you're buying someone a gift or just want to score a discount at your favorite stores.
  10. Budgeting

    Money Saving Tips For College Students

    Renting texbooks and getting a job are just two of the many ways you can start reducing your post-graduation debt.

You May Also Like

Hot Definitions
  1. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  2. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  3. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  6. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
Trading Center