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. Accounts Receivable - AR

    Money owed by customers (individuals or corporations) to another ...
  5. Vendor Financing

    The lending of money by a company to one of its customers so ...
  6. Fast-Moving Consumer Goods (FMCG)

    These are consumer goods products that sell quickly at relatively ...
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. 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.
  5. Personal Finance

    How To Shop At Wholesale Retailers

    Have a plan and think twice before you venture through the sliding glass doors.
  6. 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.
  7. 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.
  8. Budgeting

    Big Box Stores Vs. Small Retailers

    We list five factors for you to consider when choosing between a big-box or smaller retailer.
  9. Budgeting

    (Slideshow) 5 Not-So-Traditional Budgeting Tips

    You may not have heard of these easy, money-saving tips.
  10. Budgeting

    6 Tips For Feasting On A Budget

    Groceries can be very expensive, but there are some easy ways, like coupons and purchasing in bulk, you can get a lot for very little.

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center