Multiply Sales via Multiple-Quantity Discounts

Offering a discount for the purchase of multiple quantities of an item can increase the average per-sale revenue from those who do buy. But what effect does a multiple-quantity discount offer have on those who decide they wouldn’t be able to use up all those items before they’d spoil or they don’t have room to store all those boxes of the same stuff? Does knowing they’re missing out on a discount lead the shopper not to buy even a single unit at the regular price?
     Researchers at National Chung Hsing University in Taiwan have discovered a method which makes this less likely to occur: Use multiple price breaks. “Buy two and get 10% off. Buy three and get 20% off” results in more single-item purchases than “Buy two and get 10% off.” Perhaps it’s because the single-item purchaser feels more comfortable knowing that others—those who purchase two of the items, but not three—are also missing out on the best per-unit price. Supporting this interpretation is the finding that the boost in single-item purchases is greater when there are three price breaks instead of two and when there’s a greater interval between the price breaks in minimum quantity requirement and percentage discount.
     Studies at Bryant University and University of Illinois assessed how the way in which a quantity discount is stated influences shoppers. Specifically, what’s the difference between advertising “20% off if you buy at least five packages” and “20% off. Limit five packages per customer”?
     The answer: When customers are required to buy a minimum quantity to achieve the discount, they are more motivated to purchase multiple items. But when customers are allowed to purchase only a limited number of items at the discounted price, they are less motivated to purchase multiple items. Consumers live up or down to the conditions of a discount offer.
     Moreover, the nature of the motivation spreads to other purchase decisions. People buying five of the items to earn the discount will be more likely to buy in quantity other items on their list—whether or not those items are discounted. Customers who stopped at buying five items because they don’t get a discount beyond that quantity become less likely to buy in quantity other items on their shopping list. The “20% off if you buy at least five packages” is a straightforward way to increase the size of the total purchase.

For your profitability: Sell Well: What Really Moves Your Shoppers

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