.svg)
.svg)
.svg){kind=icon}
.svg)
.jpg)
Our Apps Have Driven
5X AOV | 2X Conversions | $30M+ Additional Revenue
5X AOV | 2X Conversions | $30M+ Additional Revenue
.svg)
5.0 (900+ Reviews)
Shopify Apps
.svg)
Have you ever come across this advertising slogan: “Buy more, save more”? This is exactly what the philosophy of volume discounting is — encouraging buyers to buy more while saving some money.
But does it really work?
Well, in today’s fast-paced economy, when every brand is chasing the attention of the customer — volume discounting allows brands to adopt economies of scale, capture a large market share by offering competitive pricing to customers buying in bulk, and improve customer loyalty and satisfaction by offering discounted price on volumes.
In this article, we’ll take you through the nitty-gritty of volume discounting and explain how a well-structured volume discount pricing strategy can help you implement this concept effectively in your e-commerce business.
You may be wondering: What is a volume discount? How does volume pricing with discounts work exactly?
Well, a volume discount is offered by a brand to its customers when the customer buys an increased quantity of the product. This means that the buyer who purchases a bulk quantity of the product gets a heavy discount compared to buying a single product.
By offering volume discounts, brands tap the psychology of the customers that revolve around the perception of value and the desire to maximize the value. The volume discount works as an incentive for the customer that compels them to buy more to get the reward of “more discount.”
Historically speaking, the concept of volume discounting, targeting wholesale buyers and commercial establishments, existed long back. But with the rise of ecommerce giants like Amazon and Alibaba, this age-old pricing strategy has seamlessly transitioned for ecommerce buyers fueled by changing customer behavior and tough market competition.
Learn how to set up your e-commerce volume discounting structure.
Here are some of the common types of volume discounting.
Cumulative Volume Discounts: A cumulative volume discount applies to the total volume bought by a customer over a period of time. So, each time a buyer purchases something, they add to the potential discount.
Such discount policies encourage long-term customer relationships and repeat purchases.
An example of a cumulative volume discount is a loyalty program where customers earn a higher discount rate after reaching certain spending thresholds over a year. Say, a customer can save $500 on a cumulative spend of $4000 over a period of time.
If you’re wondering how to apply such a discount strategy and keep track of it, Kite Discount & Free Gift makes it super easy to track and apply these discounts over time.
Non-Cumulative Volume Discounts: Non-cumulative volume discounts, unlike cumulative volume discounts, are applied on a single purchase, thus encouraging the customer to buy in larger volumes to avail the discount.
Brands often choose non-cumulative volume discounts when they need to clear the inventory quickly. For example, consider a brand offering a bulk purchase discount on a single order of 100 units of a product.
For brands who wish to offer non-cumulative volume discounts, Kite makes it easy to set up for single-purchase volume discounts.
Tiered Volume Discounts: Tiered volume discounts involve offering different discount rates for different tiers of product purchase. The discount increases with each tier of the quantity purchased. For example, consider this tiered volume discount a cosmetics brand offers on its lipsticks.
Unit 1: $ 40
Unit 10 - 19: $35 per unit
Unit 20-49: $30 per unit
Unit 50: $20 per unit
Now, say if a customer buys 9 lipsticks, then the total amount will be:
40 x 9 = $360
But if they buy one more, i.e. 10 units, the cost will be
35 x 10 =$350
Which means, the customer won’t mind buying one piece extra and save $10. As the volume of the product goes up, the discount amount goes up, too, encouraging customers to buy more.
And if you’re a Kite customer, you can easily create and manage these tiered discount structures effectively for your ecommerce store.
Discover the various types of eCommerce discounts for D2C stores.
To further illustrate the effectiveness of volume discounting, let's explore some volume pricing examples or that show how brands successfully implement this strategy in various industries
Fashion Retail: Here’s one of the best volume discount examples of a fashion retail offering tiered discounts on its apparel.
Electronics: Best Buy’s rewards program is a classic example of a cumulative discount program that offers customers points for each purchase they make. The points that are accumulated over a period of time can be redeemed for free delivery, discounts, etc.
Customers who spend a certain amount in a year are rewarded with different membership options that unlock additional benefits for the customers.
Beauty and Cosmetics: Jada Beauty, a beauty and skincare brand, offers attractive bundling discounts on their range of products.
Thus, these were some volume pricing examples from different industries, showing how volume discounting works to drive sales, improve customer satisfaction, and do much more.
Volume discounting has many benefits for businesses and customers alike.
A volume discount pricing strategy helps brands to improve their sales and sustainably grow their business. Here are some of the significant benefits of volume discounting:
While volume discounting itself is a powerful strategy, the use of technology can make the implementation of the strategy seamless. apps, like Easy Bundles and Kite, - first app to make product bundles and the second app to make volume discounts can aid in implementing these strategies effectively.
For example, Easy Bundles, a brand was able to integrate a product bundling strategy in its online store that resulted in $17,221.79 in sales in 30 days!
Volume discounting not just benefits the brands but attracts the customers too.
See how tiered pricing can boost average order value.
Volume discounting is a powerful tool in a company’s pricing strategy that enables sustainable growth of the company.
On the one hand, it helps the brand to manage its inventory turnover effectively, while on the other hand, it strikes customer satisfaction by meeting customer needs, helping them get better deals, and maintaining a healthy long-term relationship with the customer.
Volume discounting also helps a brand to stay competitive in the market.
For example, if Brand A offers a 50% discount on bulk purchases of a regular-use product and Brand B doesn't offer any volume discount, it’s likely that customers of this regular-use product will opt for Brand A as they’re getting a “better deal” here.
Here are the six steps to implement volume discounting in your business.
While volume discounting may have several advantages, it has some pitfalls too, if not done right. Some of the common challenges that brands face are:
Explore 7 effective discount pricing strategies to increase sales.
While an effective discounting strategy can boost your sales significantly, technology can help you simplify the implementation process of the pricing strategy.
Automating Discount Calculations: Appps can automate the discounting process, ensuring accuracy and efficiency. With Easy Bundle apps\, Arbor Made, a sustainable and reusable candle store, was able to increase its conversion rates by 20%.
Integrating Discounts with Online Storefronts: With apps like Easy Bundles and volume discount Shopify app-Kite you can easily integrate volume discounts into your online shopping store.
Tracking and Analyzing Sales Data: For the sustainable growth of your brand, it’s important to measure sales and keep track of all the sales data. Shopify apps help you to measure the sales data effectively and analyze the effectiveness of volume discounting strategies.
Volume pricing is a powerful tool for brands to move inventory and increase the number of sales quickly. While brands can try different volume discounting strategies, some of the key benefits include:
.avif)
