Buying · Supplier quotes
Supplier price breaks: is the next tier worth it?
Enter the quantity you need and the supplier's tiers. Compare your total with what it would cost to buy up to each higher break, with an optional charge for carrying the surplus.
Cost per unit = (goods + order cost + carrying cost of surplus) / units bought. Needing 400 units on a quote of $5.00 (1+), $4.50 (500+) and $4.10 (1,000+): 400 cost $2,000.00, but 1,000 cost $4,100.00 and, carrying the surplus at 20% a year, still come to $4.387 a unit.
Your numbers
Result
Price breaks, from the buyer's side
A quote with quantity breaks invites a simple question: you need 400, the supplier will drop the price at 500, so should you buy 500? Sometimes the bigger order costs only slightly more than the smaller one; sometimes it costs far more cash than you can use. This page puts the numbers side by side for every break above your quantity, and shows how much stock the extra units represent in months of selling.
The volume discount calculator on this site is the seller's view: it sets a discount schedule. This one is for checking a supplier's schedule. If you reorder regularly, the EOQ with quantity discounts page finds the best tier across a whole year.
Worked example
You need 400 units. The quote is $5.00 each from 1 unit, $4.50 each from 500 and $4.10 each from 1,000, all-units pricing, no order fee. You sell 100 a month and carry stock at 20% of its value a year.
- Buy 400: $2,000.00, or $5.00 a unit.
- Buy 500: $2,250.00. That is $250.00 more for 100 extra units. Carrying those 100 extra units adds about $33.75, so $4.5675 a unit.
- Buy 1,000: $4,100.00 for 600 extra units. Carrying cost is about $287.00, so $4.387 a unit.
Switch to incremental pricing and the same quote behaves differently: 700 units cost 500 x $5.00 + 200 x $4.50 = $3,400.00, a blended $4.857 a unit, not $4.50.
How it is calculated
All-units: every unit is priced at the tier its quantity reaches. Incremental: each band is priced at its own rate and the bands are added up. Total = goods + fixed order cost. If you enter monthly use and a holding rate, the units above the quantity you need are assumed to be used after the first units, so on average they sit for (need / monthly use + extra / monthly use / 2) months, charged at holding rate x average unit cost x months / 12. Cost per unit = (total + carrying cost) / units bought. This carrying estimate is this site's own simple model, not a published standard.
The all-units definition follows the Wikipedia article on economic order quantity, which gives the example of $50 each for 1 to 1,000 units, $45 each for 1,001 to 5,000 and $40 each above that, so that 1,500 units cost $45 x 1,500. Incremental pricing is the other common structure; confirm with the supplier which one your quote uses, because the same price list gives very different totals.
What this does not cover
- Real demand patterns: the model uses a steady monthly rate.
- Spoilage, expiry, storage limits and price changes before the surplus is sold.
- Freight and duty that change with order size. Add them to the order cost if they are fixed, or use the landed cost calculator.
- Payment terms and early-payment discounts, which are on the 2/10 net 30 page.
Sources
Opened and read on 2026-10-26 (figures and wording as of that date):
- Economic order quantity, Wikipedia: the all-units price-break definition and the $45 x 1,500 example.
- Extensions to EOQ, MIT OpenCourseWare ESD.260 (Chris Caplice, MIT Center for Transportation & Logistics): definitions of all-units and incremental discounts and the all-units algorithm (compare the total cost at the EOQ with the total cost at the break quantity).
Common mix-ups
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Often assumedA price break always gives the lower price to every unit I buy.
What the source saysMIT OpenCourseWare separates two schemes. An all-units discount applies to all units purchased if the total exceeds the break quantity. An incremental discount applies only to the quantity purchased above the break quantity, so the blended price is higher than the break price. [1]
Checked against these sources on .
Frequently asked questions
How do I know if a bigger order is worth the price break?
Compare cost per unit, not total spend. Add the carrying cost of the units you will not use right away to the bigger order and divide by all units bought. If that figure is below the smaller order's unit price, the break pays.
What is the difference between all-units and incremental price breaks?
With all-units pricing, reaching the break reprices every unit, so the total can drop even though you buy more. With incremental pricing only the units above the break get the lower price, so the total always rises with quantity.
Can a larger order ever cost less in total?
Yes, under all-units pricing. If the break quantity times the lower price is under your current total, you pay less and receive more. Check the "extra units" and money columns in the result.
What holding rate should I use?
Use your own carrying cost as a percentage of stock value per year: capital, storage, insurance and shrinkage. Leave it at 0 to ignore carrying cost.
Does this include shipping?
Only the fixed cost per order you enter. If shipping varies with the number of units, add the difference between orders yourself or use the landed cost calculator.
Disclaimer
A planning calculation from the numbers you enter, not accounting, legal or financial advice. Check the terms in your own contract or quote. Everything runs in your browser and nothing you enter is sent or stored.