Implications for Your Company

• A quantity discount can mean a number of things for your company. It could mean you produced too much of a product and did not successfully analyze demand. Perhaps your price for a single product was too high, or your marketing efforts did not entice your target market to buy the product as a single item. Quantity discounts might imply that you want to clear out your inventory to make room for a new version of the product or a new product line.
  
  

Consumer or Buyer Implications

• Quantity discounts also have implications for consumers. A quantity discount implies that consumers want more than one of a product. Perhaps they need more than one -- such as a telephone in each room. Or, perhaps they want one for themselves and want to buy others to give away as gifts or to share. Quantity discounts also imply that the buyer can afford to buy more than one of your product.
  
  

Implications for Competition

• Competitors pay attention to your pricing schemes and marketing efforts, so a quantity discount has implications for your competitors as well. From your competitor's perspective, a quantity discount implies that you are getting more aggressive on your pricing and marketing and are willing to take less of a profit -- or in some cases, a loss -- to attract customers to buy from you. Competitors might need to match your offer to continue to be competitive. They might also interpret the quantity discount to mean that your company has an inventory surplus and needs to get rid of it.
  
  

Economic Implications

• The economic state of a global economy or local economy affects the buying habits of consumers and the selling and marketing efforts of sellers. Quantity discounts might imply that an economy is down and consumers are hesitant to pay full price for a product. It might also imply that current supply is greater than current demand for the product.
  
  

The Big Picture

• Quantity discounts can entice people to buy more of your product. They can help you move products faster and give people a reason to buy your product over a competitor's product. Quantity discounts are also marketing strategies; if the discount is significant, people will tell others about it, which can lead to larger sales numbers quickly. They can, however, result in lower profit margins for your company, so think through your pricing scheme carefully.