Bulk Pricing of Packing and Shipping Supplies
Packing Supplies Volume Pricing vs Tier pricing
Bulk pricing of packing and shipping supplies simply means the more you order the more you will save. The quantity purchasing lowers the cost of shipping and most companies will relay the savings to their customers by offering discounts. One of the challenges of companies engaged in e-commerce and online sales is the shipping costs of the goods they’re selling. The shipping costs will be much lower if the buyers consolidated their purchases of shipping supplies to once or twice a month instead of ordering once a week. These savings add up at the end of the year to improve the bottom line of any business.
Bulk pricing in general means increased purchase quantity will lower the cost per unit. The important part of bulk ordering is knowing the difference in the pricing strategy, which is either Tier Pricing or Volume Pricing:
- Volume Pricing
Volume Pricing is fairly straight forward; the volume purchase pricing is applied to all units meeting or exceeding the minimum volume threshold set by the company. For example, if the price of Shipping boxes is $10 when ordering 25 or more and $8 for orders of 100 or more and you order 125 boxes the price would be $1,000. This simple math does not apply to Tier Pricing and although many people think that both tier pricing and volume pricing are the same there is a major difference between the two strategies. All StarBoxes promotions and discounts for bulk purchases are based on Volume Pricing, which as we can see in the example below is more beneficial for the buyers of shipping supplies.
- Tier Pricing
In tier pricing, your price is discounted by each tier. This means when ordering bulk, the buyer should add the price of each tier to come up with a total price. If we calculate the same example in Volume Pricing, we have to calculate the first tier of 25 shipping boxes a $10 each or $250 and the remaining 100 boxes at $8 or $800 for a total of $1,050. In this example, the Tier Pricing strategy will cost the consumer $50 more than the Volume Pricing strategy. At StarBoxes we prefer the Volume Pricing strategy to offer even lower prices with bulk purchases.
Please see the example below:
Tiered Pricing and Volume Pricing
|Tier||Product||Price Per Unit|
|One||25 Shipping Boxes||$10|
|Two||100 Shipping Boxes||$8|
|Three||500 Shipping Boxes||$6|
|Four||Pallet of 1000 Shipping Boxes||$4|
In this example the consumer ordering 100 boxes with Tier Pricing will pay $10 each for first 25 boxes and $8 for the remaining 80 boxes:
(10 x $25) + (80 x $8) = $890
The volume pricing for the same price strategy, on the other hand, there is no tiered adding up instead the price of the 100 boxes is multiplied by $8:
100 x $8 = $800
There is a $90 difference in buying the same amount of the same product.
There are many reasons for companies to engage in bulk sales and pricing:
- Manufacturer Discounts – Some manufacturers offer suppliers discounts with large orders. The suppliers are in a very competitive market and need to lower their price per unit costs. To stay ahead of the competition, they will, in turn, transfer the discounts to the buyers.
- Shipping Costs – This discount is more thru shipping supplies companies since the profit margin is very low and there is not much room for discounts. Bulk ordering or ordering by pallets is a great way to pay less for your shipping costs. The packing experts at StarBoxes are available to quote any bulk or pallet order for shipping supplies.
- Processing Costs – Processing each order is time-consuming and costly but requires less time per unit to process larger orders. This is another reason to order your bulk shipping supplies from the StarBoxes and enjoy the discounts.