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A large catalog company has requested Tier Pricing and while I'm familiar with the term, I don't know where to begin. Should I create two or three tiers? What should the percent and quantities breakdowns be?
Category is Hard Goods. (Luggage)
Thanks for the help!
If you have industry contacts that sell similar goods to other catalogs, or sell different goods to the same catalog, they may be able to help you with what is standard for your category. Depending on your relationship with the catalog's buyer, you may be able to ask them what they are accustomed to seeing.
The way you break down the discounts based on volume purchases will be highly dependent on:
1) Whether you have economies of scale for either purchasing or manufacturing your product.
2) Whether you have economies of scale for packaging and shipping products to the catalog.
3) Whether by taking a larger order now, you save money in carrying costs of inventory.
4) How much profit you are willing to give up to get larger orders.
Your volume discounts should never put you in the position of making no profit or losing money on an item unless that is a part of your overall marketing strategy and your business's overall budget can handle the hit.
Best regards,
Molly Donaldson
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