Bulk Discount Pricing: How to Calculate Tiers

How to price volume discounts. Compare all-units and incremental tier pricing with worked examples and a quick formula.

A bulk discount lowers the price per item when a customer buys more. The maths depends on how you apply the tiers.

There are two common ways, and they give very different totals.

Total = quantity × price per unit at that tier

What are the price tiers in this example?

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How does all-units pricing work?

The tier price applies to every unit in the order.

• 20 units: 20 × $9 = $180
• 60 units: 60 × $8 = $480

It is simple and rewards big orders, but the price can drop sharply at the tier edge.

How does incremental pricing work?

Each tier price applies only to the units inside that tier.

• 20 units: 9 × $10 + 11 × $9 = $90 + $99 = $189
• 60 units: 9 × $10 + 40 × $9 + 11 × $8 = $90 + $360 + $88 = $538

How much is the discount worth?

At list price, 60 units cost 60 × $10 = $600.

• All-units: $480, which is 20% off
• Incremental: $538, which is about 10.3% off

Which method should you use?

All-units pricing is easier to explain and encourages customers to buy up to the next tier. Incremental pricing protects your margin on big orders. Check your costs first with the markup vs discount guide.

Use the calculator

Use the discount calculator to turn a percentage into a price, and see how to calculate a discount percentage for the formula.

FAQ

How do I calculate a bulk discount?

Find the price per unit for the quantity ordered, then multiply by the quantity. With incremental tiers, price each tier separately and add them.

What is the difference between all-units and incremental discounts?

All-units applies the lower price to every unit. Incremental applies it only to units inside the tier.

What discount should I offer?

Start from your margin. Make sure the discounted price still covers your costs and a profit.