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6 Steps to Implementing Volume-Based Pricing in B2B eCommerce

eCommerce
min read

published on

June 25, 2024

Volume-based pricing — aka volume pricing, bulk pricing, volume discounts, and quantity discounts — is a simple but powerful strategy: The more customers buy, the better deal they get on each item. This can help you increase average order value (AOV), expand your customer base, and even stand out from your competitors.

The good news is that creating an effective volume-based pricing structure for your B2B store can be straightforward. In this guide, we explain how to do it in six steps. We also share the tools (such as B2B order management software, workflow validation systems, and more) that make the process even easier.

Short on time? Here are the key takeaways

  • Volume-based pricing is all about rewarding bigger orders. The more a customer buys, the better the price they get.
  • There are a few ways to set up volume pricing. Tiered pricing, volume discounts, and pricing packages are all popular choices.
  • Before you dive in, take a good look at your customer data. Who are your biggest spenders? What do they usually buy? This info is gold when deciding on your pricing tiers.
  • Be clear about your rules. What purchase amounts qualify for each tier? What’s the discount?
  • Spread the word about your volume-based pricing. Make sure it’s easy to find on your website, in marketing materials, etc.
  • Keep an eye on how your pricing is performing. Are customers taking advantage of it? You might need to tweak things over time to get the best results.

Understanding volume pricing structures

There are several ways to structure your volume pricing offers:

  • Tiers: Prices are structured into different levels based on volume ranges. Each tier has a specific price per unit that applies to all units within that tier’s quantity range.
  • Thresholds: Once they reach a certain volume threshold, customers receive a discount on all units purchased. The discount is applied to the entire order rather than per unit.
  • Packages: This model’s pricing is based on predefined bundles or packages of products or services. Customers can choose from different package options that offer increasing value with higher volumes.

Tiered pricing vs. volume pricing

In a tiered pricing model, the price per unit varies based on the volume tier. Each of the price tiers has a specific bulk price that applies to all units within that tier’s quantity range. 

For example:

  • Tier 1: 1-10 units at $10 per unit.
  • Tier 2: 11-20 units at $9 per unit.
  • Tier 3: 21+ units at $8 per unit.

In this example, if a customer purchases 15 units, they would pay $10 each for the first 10, then $9 each for the remaining 5, bringing their order total to $145.

With volume pricing, a single discounted price applies to all units purchased once a specific volume threshold is reached. The bulk discount is applied to the entire order rather than per unit. 

For example:

  • 1-10 units: No discount, regular price of $10 per unit.
  • 11-20 units: 10% discount on entire order.
  • 21+ units: 20% discount on entire order.

Setting up a B2B volume pricing system in 6 steps

Now, let’s discuss how to establish a volume-based pricing system for your business.

1. Analyze customer segments and purchases

Before you start offering discounts, dig into your customer data. Who are your big spenders? What do they usually buy in bulk? 

Tools such as catalog management software, purchase order management systems, and B2B PIM (product information management) software make determining this information easier. With a B2B PIM specifically, you can centralize all your product data — descriptions, images, pricing, etc. — and see which products are most popular with your customers.

You can then use these insights to offer volume price discounts based on buying history or industry.

2. Define pricing tiers by volumes

Secondly, think about how much a customer needs to buy to jump up to the next discount level. Ensure the savings are good enough to make them want to add more to their cart. A B2B shopping cart that can automatically calculate those tiers can help you out here.

3. Set qualification criteria

Next, determine how customers will qualify for discounts.

You could base this on a minimum order amount — either a dollar amount (e.g., $1,000) or a quantity of items (e.g., 50 units). 

Or, you could offer discounts to regular customers. You might identify “regular” customers based on a specific number of past orders (e.g., at least five previous purchases) or a cumulative purchase amount within a certain timeframe (e.g., $5,000 spent in the past six months). 

4. Design a tiered discount structure

The next step is to decide how much of a discount you will give for each volume tier. 

Obviously, you still need to make a profit, so find a balance between offering a great deal and keeping your business healthy. This takes time and experimentation, so continuously analyze your sales data, track your profit margins, and be willing to adjust your pricing as needed to maximize your success.

Let’s consider an example. Say you sell industrial widgets that cost $75 each to produce and ship. You have determined you need to sell 10 units to break even at the standard price of $100 per unit. To achieve a 20% profit margin on each unit, you need to price them at $93.75 or higher. 

With this information, you can start experimenting with tiered discounts while ensuring you are still making a profit at each tier.

Expert tip: Price list software comes in handy here. It centralizes and manages your pricing information, ensuring consistency across channels. For the end user, workflow validation tools are useful. Junior buyers can use them to get approval on purchases from senior buyers, for example.

5. Communicate pricing options

Now it is time to make sure your customers know about the volume-based pricing you offer. 

Feature the information on product detail pages, showcasing the tiered discounts or bulk savings customers can unlock. You can also use AI product description generators to effortlessly incorporate these savings into compelling product descriptions. 

Additionally, you can use email marketing and newsletters to spread the word and ensure your customers are aware of the benefits of buying in bulk.

6. Monitor and adjust

Volume pricing is not a “set it and forget it” thing. Regularly review your sales reports to track the number of orders that qualify for volume discounts, the AOV of those orders, and the overall impact on your revenue and profitability.

Conduct surveys or gather feedback from your sales team to gauge customer satisfaction with your volume pricing structure. Are they aware of the discounts? Are they finding them valuable?

You should also monitor your competitors’ pricing strategies to ensure your volume discounts remain competitive and attractive.

Finally, make adjustments as you go to get the best results. You can tweak the discount levels, adjust tier pricing thresholds, change qualification criteria, or offer unbundled discounts until you find the perfect structure for your business.

Expert tip: As your volume pricing strategy gains traction, you might see an increase in website traffic and transactions if your website is open to the public. Therefore, it is crucial to have a reliable eCommerce hosting solution that can handle these fluctuations and ensure optimal website performance for your customers.

The bottom line

As a B2B eCommerce business, you might be missing out if you are not using volume pricing yet. It is a great way to boost sales, keep customers happy, and stand out from the competition. 

To implement volume-based pricing, start by understanding your customers’ buying habits. Then, design a tiered discount structure that incentivizes your customers and works for your profit margins. 

Next, establish your pricing tiers and qualification criteria. Finally, effectively communicate these offers to your customers, continuously monitor their impact, and make data-driven adjustments as needed.

Frequently Asked Questions

What is volume-based tiered pricing?

Volume-based tiered pricing is a pricing model where the price per unit decreases as the quantity purchased increases. Prices are segmented into tiers, each with a specific volume range and corresponding price per unit.

How to create volume pricing?

To create volume pricing, analyze customer purchase patterns, define volume tiers and discounts, set qualification criteria, design a tiered pricing structure, communicate the options to customers, and continuously monitor and adjust your pricing strategy.

What is a price volume model?

A price volume model is a pricing strategy that offers lower prices for higher purchase volumes. It is designed to incentivize customers to buy larger quantities, ultimately increasing revenue and profitability for the business.

About the author
Arnaud Rihiant
Founder & CEO @ DJUST

Expert in topics on B2B, eCommerce, market trends, business strategy

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