Volume Discount Tier Calculator
Design bulk pricing tiers from a list price and unit cost, and check the gross margin each discount level leaves before you commit to it.
How it works
Tier price = list × (1 − discount%) · Gross margin % = (tier price − cost) ÷ tier price × 100
Volume discounts reward larger orders, but every percentage point off the list price comes straight out of margin, not revenue. Applying each tier’s discount to the list price and recomputing margin against unit cost shows exactly how thin each level gets — and whether a headline discount quietly dips below cost. The point where margin turns uncomfortable is your discount ceiling, no matter how much volume the buyer promises.
Worked example
At a $100 list price and $55 cost, the base margin is 45%. A 15% third tier prices at $85, leaving a ($85 − $55) ÷ $85 = 35.3% margin — still healthy. Had cost been $80, that same tier would collapse to about 5.9%, a clear signal the discount is too deep.
Frequently asked questions
How deep can a volume discount go?
Only as deep as leaves an acceptable margin at your true unit cost — including fulfilment and support, not just goods. This calculator surfaces the margin at each tier so you set the ceiling on profit, not on gut feel.
Should discounts be flat or marginal?
Marginal (only the units above each threshold are discounted) protects margin better than a flat discount on the whole order once a threshold is crossed. Model both and pick the one that keeps large orders profitable.
Do volume discounts always increase profit?
No. If the extra units would have sold at full price anyway, a discount just donates margin. Discounts pay off only when they genuinely unlock orders you would not otherwise win.
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Educational estimate, not financial advice.