A quantity discount is 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 customers to purchase in larger quantities.
By selling in larger quantities, the seller can increase their revenues per transaction. The module allows to scale quantity discounts in "steps," with lower per-unit prices at higher quantities to encourage bulk buyers. For instance, a coat maker that employs "steps" in its pricing strategy could offer coats at $20 each, five for $90, and 10 for $160.
Quantity discounting can also come in handy when a seller is keen to lower its inventory. Taking such action can be particularly useful when the product in question risks going out of fashion or becoming obsolete, due to a technological breakthrough.
There are several caveats to this strategy, though. The main drawback of quantity discounts is that the discount squeezes profit per unit, unless sufficient economies of scale are realized to at least offset the discount offer.
So, if the per-unit cost for the coat company is $10, the company makes a $10 profit on every single $20 sale. However, if the company offers quantity discounts of $2 per coat for orders of five coats and $4 per coat for orders of 10 coats, then it makes only $8 in profit on an order of five and $6 in profit on an order of 10. That would of course change if the coat company is able to save money by, for example, buying in bulk from its suppliers.
This module is used in the backend only and can be found under the Modules and Extensions tabs.
Widgets and pages:
No widgets and pages are added to this module.