Inventory glossary
What is Price breaks?
Price breaks are lower per-unit prices a supplier offers when you order larger quantities.
Price breaks change what the right order quantity actually is. Buying more to hit a cheaper price only helps if you can sell through the stock before it ties up too much cash or goes stale, so the saving per unit needs to be weighed against the extra holding cost and risk of excess inventory.
To use price breaks well, compare the total cost of each tier, not just the unit price. Work out how many weeks or months of stock the bigger order represents, and only take the discount if that time frame is realistic for your sales pace and storage space.
Example
A candle supplier charges $6 per unit for orders under 100 units, $5.50 per unit for 100 to 299 units, and $5 per unit for 300 or more. A store selling 40 candles a month needs 100 units for a 2.5 month supply. At 100 units the cost is $550 instead of $600, a saving of $50. Buying 300 units would cost $1,500 and last about 7.5 months, so the store needs to decide if tying up that extra cash and shelf space is worth the lower unit price.
Common mistakes
- Ordering the bigger tier just to get the lowest unit price without checking how long the stock will last.
- Ignoring storage limits and cash tied up when comparing tiers.
- Forgetting that slow-moving SKUs rarely make sense at the biggest price break, even if the discount looks good.
Price breaks and SteadyShelf
SteadyShelf suggests order quantities rounded to case packs based on your forecast, so you can see whether a supplier's price break tier actually matches how fast a SKU sells before committing to it.
SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.
Related terms
Case pack · Minimum order quantity · Economic order quantity · Volume discount · Carrying cost
FAQ
Should I always order enough to hit the next price break?
No. Only do it if you can sell through the extra stock in a reasonable time and have the cash and space to hold it. A small unit price saving is not worth months of excess inventory.
How do I compare price break tiers fairly?
Calculate the total order cost at each tier, then divide by your average monthly sales to see how many months of stock each tier gives you. Pick the tier that fits your sales pace, not just the lowest unit price.
Let SteadyShelf do this math for every SKU
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