What is a quantity discount?
A quantity discount (also called a volume discount, bulk discount or quantity break) is a lower price per unit when a customer buys more units of the same product in one order, for example 1 for $30, 2 for $54 and 3 for $76.50. The aim is to raise the order value: the customer pays less per unit, and you earn more per order because costs such as shipping, packing and fees are spread over more units.
A discount only helps if the extra orders at the higher quantity are worth more than the discount you give to customers who would have bought that many anyway. That trade-off is what the break-even column measures.
Quantity discount formulas
For a product with price P, unit cost C, cost per order F and a payment fee f (as a fraction of what the customer pays), a tier of Q units works out as follows:
- Bundle price B = Q × P × (1 − discount %), or the fixed bundle price you set.
- Price per unit = B ÷ Q.
- Customer saves = Q × P − B, and as a percentage: savings ÷ (Q × P).
- Gross profit per order GQ = B − Q × C − F − f × B.
- Margin = GQ ÷ B.
- Profit vs 1 unit = GQ − G1, where G1 = P − C − F − f × P is the profit of a single-unit order.
- Discount given away to a shopper who would have bought Q units at full price anyway = (Q × P − B) × (1 − f).
- Break-even upgrade share = discount given away ÷ [(Q − 1) × (P × (1 − f) − C)].
The break-even upgrade share is the smallest part of the orders at a tier that must come from shoppers who would otherwise have bought just 1 unit. Below that share, the discount you give to "would have bought anyway" shoppers costs more than the profit the upgraders add. The per-order cost F cancels out of this formula, because both kinds of shopper place one order either way; it still matters for profit and margin.
Worked example
A product sells for $30, costs $10 to make and each order costs $6 to pack and ship. There is no payment fee in this example. A single-unit order earns $30 − $10 − $6 = $14 (46.7% margin).
| Tier | Bundle price | Per unit | Saves | Gross profit | Margin | Break-even share |
|---|---|---|---|---|---|---|
| 1 unit | $30.00 | $30.00 | - | $14.00 | 46.7% | - |
| 2 units, 10% off | $54.00 | $27.00 | $6.00 (10%) | $28.00 | 51.9% | 30% |
| 3 units, 15% off | $76.50 | $25.50 | $13.50 (15%) | $40.50 | 52.9% | 34% |
| 4 units for $99 | $99.00 | $24.75 | $21.00 (17.5%) | $53.00 | 53.5% | 35% |
For the 3-unit tier: the bundle price is 3 × $30 × 0.85 = $76.50, so the customer saves $13.50. Gross profit is $76.50 − $30 − $6 = $40.50, which is $26.50 more than a single-unit order. A shopper who would have bought 3 units at $90 anyway now earns you $13.50 less. The break-even share is $13.50 ÷ (2 × $20) = 33.75%: if at least 34 of every 100 orders at this tier come from shoppers who would otherwise have bought 1 unit, the tier adds profit. Enter these numbers in the calculator above to check every row.
Volume pricing vs tiered pricing
The two terms are often used for the same thing, but in pricing they can mean different rules:
- Volume pricing (all units): once the order reaches a tier, every unit gets that tier's price. Buying 3 at 15% off means all 3 units are 15% off. This is how quantity breaks on a product page usually work, and it is what this calculator assumes.
- Tiered pricing (graduated): each band of units has its own price, so units 1 to 10 cost one price and units 11 to 50 another, and the order total is the sum of the bands. This is common in wholesale and software pricing.
If you sell with graduated tiers, work out the order total for the quantity yourself and enter it as a fixed bundle price for that quantity; every other result still applies.
How to set quantity discount tiers
- Start from your margin. The deeper the discount relative to your unit margin, the higher the break-even share. A low-margin product cannot carry large percentages.
- Let the per-order savings fund the discount. Shipping and packing paid once per order is what makes a multi-unit order cheaper to serve. Discounts close to that saving cost you little.
- Keep steps small and easy to compare. Shoppers read the price per unit and the savings line, so round bundle prices and show the saving clearly.
- Compare against your real mix. If many customers already buy 2 or more, a 2-unit discount mostly gives money away; start your first tier at a quantity few people buy today.
- Test, then keep the winner. The break-even share tells you the bar to clear; an A/B test on real traffic tells you whether a tier clears it.
Frequently Asked Questions
How do you calculate a quantity discount?
Multiply the unit price by the quantity, then apply the discount: bundle price = quantity × price × (1 − discount %). Divide the bundle price by the quantity for the price per unit. For example, 3 units at $30 with 15% off cost $76.50, or $25.50 a unit.
What is the quantity discount formula for profit?
Gross profit per order = bundle price − quantity × unit cost − costs per order − payment fees. Compare it with the profit of a single-unit order to see how much each buyer who moves up adds.
How much of a volume discount should I offer?
There is no single right percentage. Enter your price and unit cost: the calculator shows the margin left at each tier and the share of orders that must come from upgraded buyers for the discount to pay for itself. The lower that share, the safer the tier.
What is the difference between a percent off tier and a fixed bundle price?
A percent off tier discounts every unit by the same percentage. A fixed bundle price sets the total for the quantity, such as 4 for $99, which lets you use a rounded price. The calculator works out the equivalent price per unit and savings for both.
Is volume pricing the same as tiered pricing?
Not always. With volume pricing every unit gets the price of the tier the order reaches. With graduated tiered pricing each band of units has its own price. This calculator uses the all-units rule; for graduated pricing, enter the order total as a fixed bundle price.
Does this calculator save my numbers?
No. It runs entirely in your browser and nothing you enter is sent or stored.
