If an individual or corporation wants to successfully profit from selling a large amount of a single product, they must be able to determine the volume discount for each product. Determining this discount does not require an advanced business or mathematics degree, there are but a few simple steps to makes volume discounting a profitable venture.
Instructions
1. Verify what other companies are charging for the item you want to discount. Most products are available through another company and that price is a good guideline on how much to discount the product. However, some products are unique or scarce enough that a good comparison may not be possible.
2. Validate the demand for the product to which you will apply the volume discount. When demand is high for a product, a company can assign a higher price. Conversely, if demand is low then the pricing may have to follow suit in order to sell the inventory on hand. If there is no historical sales information on the product, you may have to convene a product-testing panel to advise you on pricing or you could offer a few products to customers to gauge what they are willing to pay for the product.
3. Establish the market price for a single item as the baseline for the volume discount.
4. Purchase discounting software that can determine the price breaks you should assign given the historical pricing information and the number of items you wish to sell. For example, if a customer wants to buy 50 items at a time, they will get a 10 percent discount; if they purchase 100, then the discount is 15 percent, and so on.
5. Institute the volume discount at the various price levels based on demand, industry pricing, and profit margin.
