What is a volume?
A volume discount is an economic incentive to encourage individuals or businesses to 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 inventories by selling more units to bulk buyers who are incentivized by the lower price.
How Volume Discounts Work?
The discounts can take on a variety of structures. Volume discounts are often tiered—that is, a specific discount is applied to X number of units within that tier. The discount increases as for tiers that include larger and larger numbers of units. For instance, a discount could be applied to 50 to 100 units sold, with a greater discount for 101 to 200 units sold, and an even larger discount could apply to 201 to 300 units sold, and so on.