What B2B Companies Get Wrong About Volume Discounts - HBR | The MarTech Alert | Scoop.it
Never forget: the key goal of volume discounting is to incentivize additional purchases. Most managers don’t understand the purpose of a volume discount. A classic mistake is to blindly subscribe to the “if you buy more, I have no choice but to give you a break” mentality. That’s incorrect. A discount is only necessary when it leads to a sale that will deliver additional profit that wouldn’t have otherwise been earned.

Many B2B managers view volume discounts as a reward to their biggest customers. While it’s important to show appreciation to kingpin clients, providing discounts shouldn’t be the lead gesture. There are less expensive ways to express gratitude. And remember, in many situations a big purchase simply means the customer loves (or needs) the product–a reason to hold the line on pricing.

When possible, tailor volume discounts to each customer. A key challenge of designing any volume discount strategy is that each customer has a different level of what they consider to be a “large purchase.”