Legal Definitions - volume discount

A volume discount is a reduction in the per-unit price of goods or services offered to a buyer who purchases a large quantity. This pricing strategy incentivizes customers to buy in bulk, benefiting both the seller (through increased sales volume) and the buyer (through lower costs per item).

Here are some examples to illustrate how volume discounts work:

• Imagine a small business that needs to purchase printer paper for its office. If they buy one ream of paper, it might cost $8. However, if they purchase a full case containing ten reams, the supplier might offer a volume discount, reducing the price to $6 per ream. This means the business pays $60 for the case instead of $80, saving money by buying a larger quantity.

• Consider a school district looking to purchase new laptops for all its students. A technology vendor might quote a price of $800 per laptop for individual units. However, if the district commits to buying 5,000 laptops, the vendor could offer a significant volume discount, dropping the price to $650 per laptop. This substantial saving makes it more cost-effective for the school district to equip a large number of students.

• Think about a catering company that regularly buys fresh produce from a wholesale market. For a small order of 5 pounds of tomatoes, they might pay $2.50 per pound. But if they place a larger order for 50 pounds of tomatoes, the wholesaler might apply a volume discount, reducing the price to $2.00 per pound. This allows the catering company to lower its ingredient costs when preparing for large events.