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What Is a Volume Discount?

3 minutes read
What is a volume discount?

Online store owners are always looking for ways to drive sales and encourage repeat business. One proven pricing strategy is the volume discount, which incentivizes customers to buy more in a single transaction and fosters customer loyalty and satisfaction. Website on Demand explains how to maximize savings for customers who make larger purchases. 

What Is a Volume Discount?

A volume discount is when online store owners offer price markdowns for large purchases. The pricing model encourages customers to buy multiple units or larger quantities of a single product. Besides helping buyers optimize their savings, these discounts also help online sellers reduce their inventory. 

Other names for this kind of discount include bulk discount, volume discount pricing, and volume discount. No matter which term you use for your online store, you incentivize customers to load up their carts with your products.

What Are Different Examples of Volume Discounting?

There are three common types of volume discounts:

  • Tiered: With tiered volume discounting, you offer a markdown based on product quantity or service purchased, for instance, 10% off when customers buy at least 10 units or 30% off when customers purchase 50 or more units. This kind of discount works best when there’s a substantial difference between single-item product prices and the markdown cost of multiple products.
  • Threshold: Customers can save money by receiving threshold discounts once they reach a specific quantity of a service or product. For example, you might offer 25% off all orders over $500. Threshold discounts are a great selling strategy for moving old inventory or promoting specific items.
  • Package: With package volume discounting, shoppers save money when they buy multiple services or items together. For instance, you can give shoppers 15% off when they purchase two items from the same collection. If you want to upsell items or create a subscription box, this is a great option. 

What Are the Benefits of Volume Discounts?

Benefits of volume discounts.

By rewarding shoppers for filling their digital carts, you can also increase your market share. When you maximize the possibilities of different volume markdowns, you meet varied shopper needs better. For example, one customer segment may want to buy multiple items for corporate gifts, and another could want to bundle complementary products in one purchase.

Does your online store thrive on recurring buys for items like consumable products instead of recurring revenue? If so, offering discounts on volume can help your sales revenue blossom. Shoppers are more likely to purchase from your store again if you offer bulk markdowns.

What Are the Disadvantages of Volume Discounts?

The key to maximizing volume markdowns is knowing their potential negative impact on your business. For instance, you must understand how to balance product ratios when deciding how much discount to offer. Otherwise, you may struggle to turn a profit.

You should also consider all other savings you offer before launching volume markdowns. Featuring too many discounts may suggest items are not worth the full price. If your store is new to the e-commerce scene, promoting deep discounts could prove detrimental to building brand loyalty.

Master the Art of the Volume Discount With Website on Demand

When executed well, offering a volume discount can differentiate your store, boost your brand’s appeal, and keep customers coming back for more. For more proven strategies for achieving more online sales, contact a Website on Demand representative today.

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