Last Updated on November 30, 2021 by Dan Christoffersen
In this blog post, we are going to tell you what these discounts are and why you should incorporate them into your business. Last but not least, we are going to show you just how easy they are to implement.
Now let’s get started!
What are volume and bulk order discounts?
Volume discounts, bulk order discounts, wholesale rebates, quantity discounts, tier pricing, threshold discounts, etc. All different expressions for (almost) the same thing; Discounted unit prices in return for larger purchases.
Essentially, you reward your wholesale customer for purchasing multiple units by offering them your product at a reduced price.
These types of discounts are frequently used by wholesalers to incentivize retailers to purchase more units.
While these different discounts work similarly, there are some subtle differences in how they work. Below we are going to cover the three most common wholesale volume discounts:
- Wholesale Tier discounts
- Wholesale Threshold discounts
- Retailer-specific discounts
Wholesale Tier discounts
Tier discounts work as a “staircase” of discounts that allows you to define the price/discount depending on the quantity/volume ordered by the customer. Each individual step on the discount staircase has a different discount level. Wholesale tier discounts can be on a specific product or for the entire order.
Below is an example of a product-specific tier discount:
- 1 unit = 100 EUR per unit (No discount)
- 2-4 units = 95 EUR per unit (5% discount)
- 5-9 units = 90 EUR per unit (10% Discount)
- 10+ units = 85 EUR per unit (15% discount)
As you can see, the more units the customer purchases, the lower the unit price.
Wholesale Threshold discounts
A Threshold discount adds a discount percentage or rebate to the entire purchase order when it reaches a certain threshold.
For example, offering an 8% discount for purchases of 10.000 EUR or above. Or a flat rate rebate of 50 EUR when a customer puts in an order for 500 EUR or above. If the order value does not reach the desired threshold value, the customer is not entitled to the discount.
While tier discounts and threshold discounts are traditionally available to all wholesale customers, it is quite common to give retailer-specific discounts as well. This type of discount is not something you make available to all your wholesale customers, but only a selected crowd.
Wholesale brands give these retailer-specific discounts to the retailers that purchase the most. In that sense, it is a volume/bulk discount as well.
But instead of only getting the discount when reaching a certain quantity of volume, the retailers enjoy this discount on all their orders. No matter the size. The discount level is negotiated in advance, as the retailer has proven to be a big buyer and deserving of a discount.
The retailer-specific discounts are typically on all products and orders. But it can also be added to only specific products, that the retailer frequently purchases.
Why should you do wholesale discounts?
If you are not already using wholesale discounts, you should seriously consider incorporating them. By doing so, you can expect to see benefits both for you and your customers.
When you offer volume and quantity discounts, you will begin to see increasing order volumes. Your customers will purchase more when you lower the prices. It’s basic supply and demand.
True, you do need to reduce the unit prices. But at the same time, the larger quantity will, in most cases, enable you to decrease your unit costs as well. In the end, offering these wholesale bulk discounts will increase company profits.
Your customers stand to gain from these discounts as well. Mainly because they can purchase your products at a discounted price and earn a higher mark-up when reselling. This means that your customers will continue to purchase your products. When their business is thriving, so is yours.
How do you create volume and bulk discounts?
Wholesale pricing is complicated. Even without quantity discounts.
Luckily, it’s not complicated to set up discounts if you use wholesale e-commerce software for your sales process. A wholesale e-commerce platform like Turis will allow you to manage all your wholesale prices and discounts effortlessly.
How to set up Tier discounts
In Turis, you can create Tier discounts on product-level or the entire order. All you have to do is to select the desired discount for each tier.
How to set up threshold discounts
Creating Threshold discounts is just as simple. In the example below, we’ve set threshold discounts as monetary values for four different currencies.
Of course, creating a retailer-specific discount is easy as well. You simply put in the discount level for the specific retailer, and all their prices will now get reduced by that discount level.
Get started with wholesale discounts today!
You can start using all of these wholesale volume and bulk discounts today. All you need to do is to sign up for our free B2B eCommerce software. Use the button below and sign up in 5 minutes.