Free tool
Bulk discount calculator: is the bigger order worth it?
Your supplier offers a lower price if you order more. Compare the savings against the cost of holding the extra stock.
How it works
The savings are the price difference on the bulk quantity. The cost is holding more stock, on average, for longer while you sell through the same number of units. Holding cost = average units on hand × unit price × carrying rate × time.
Example: selling 8 a day, ordering 720 at $4.60 instead of 240 at $5.00 saves $288. Holding the bigger order costs about $65 more in carrying cost over the 90 days it takes to sell, so the bulk order wins by about $223, as long as the product keeps selling at that pace.
The risk to watch: if sales slow, the bulk order turns into dead stock. Check how much cash you want tied up before you say yes.
FAQ
Is a bulk discount always worth it?
No. A bigger order saves on unit price but you hold the extra stock longer. If it takes months to sell, carrying costs can eat the discount.
What carrying cost rate should I use?
If you don't know yours, 20% to 30% of inventory value per year is a common estimate. Work out your own with the carrying cost calculator.
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