Pricing strategies have been the topic of my past two posts. You can access them below:

Pricing Strategy: Extenuating Circumstances

The Effect Of Competition On Pricing Strategy

Today’s post on pricing strategies answers the question:

Will Prices Vary By The Amount Of Product Or Service Purchased?

It is common in pricing strategies to offer discounts to customers who buy in quantity, with the larger the quantity, the larger the discounts.

I’ve known of publishers who will sell a book for just a $1 profit a piece if they can sell 5000 books at a time. Although that would provide only $5000 profit, the quick turn-around on investment can make it worthwhile.

What Is It Costing You To Store Your Products?

It costs to have money invested in a product that’s just setting in storage. While in storage, products generate no cash flow or return on investment. So an immediate $5000 profit on a $50,000 investment may be a better pricing strategy than selling for a larger profit over a course of three years.

Of course, you can always have more of the product produced and will likely get your second order cheaper than your first because the first order absorbed the set-up costs. So the second order of 5000 may actually produce an even greater profit than the first would have sold at retail.

Thus, providing quantity discounts and selling more products quickly provide potentially profitable pricing strategies for small businesses.

To read the next post in this series, click the following link: Pricing Strategies: Price Consistency.

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Posted 5-15-08: Pricing Strategies:

Quantity Discounts

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This entry was posted on Wednesday, May 14th, 2008 at 7:05 am and is filed under Price.You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.