Legal Definitions - quantity discount

A quantity discount is a pricing strategy where a seller offers a reduced price per unit of a product or service when a buyer purchases a larger amount or volume. This incentive encourages customers to buy more by making larger purchases more cost-effective on a per-unit basis.

Here are some examples to illustrate this concept:

• Example 1: Office Supplies Purchase

  A small business needs to buy printer paper. A local office supply store sells individual reams of paper for $8 each. However, if the business purchases a full case containing 10 reams, the price per ream drops to $6.50, making the total cost for the case $65 instead of $80.

  This illustrates a quantity discount because the business pays less per ream of paper by buying a larger quantity (a full case) compared to buying individual reams.

• Example 2: Software Licensing for a Company

  A software company offers different pricing tiers for its project management tool. For a single user, the monthly subscription is $25. For a team of 10 users, the price is $200 per month, meaning each user effectively pays $20. For an enterprise plan covering 50 users, the total monthly cost might be $750, bringing the per-user cost down to $15.

  This demonstrates a quantity discount as the per-user cost of the software decreases significantly when a company licenses the product for a larger number of employees.

• Example 3: Bulk Material Order for Construction

  A landscaping company needs to purchase gravel for several projects. A quarry charges $50 per ton for orders under 20 tons. However, for orders of 20 tons or more, the price drops to $40 per ton. The landscaping company decides to order 25 tons to take advantage of the lower price, saving $10 per ton on their entire order.

  This shows a quantity discount because the landscaping company receives a lower price per ton of gravel by committing to a larger purchase volume.