Replenishment

When a supplier's price break is worth ordering more for

The price list has a cheaper row further down. Whether you should reach it is a short sum, and the unit price is the wrong place to start it.

Marcus VolstedCo-founder, Restocio Published 27 October 20269 min read

Every source on this page was opened and read, and each one is dated in the Sources section at the foot.

A supplier's price break above your minimum is worth taking when the discount across the whole order beats what the extra units cost you to hold until they sell, with room left over for the ones that never do. In the example below, a product that needs 540 units clears that bar at the 1,000-unit tier with about 43 unsold units to spare. The 2,000-unit tier earns more on paper and leaves less room. The minimum itself, the floor you cannot order under, has its own page. This one starts where the minimum is already met and the price list has a cheaper row further down.

Why the unit price is the wrong number to compare

Suppliers are taught to build these tables. Alibaba's own seller blog, read on 21 October 2026, defines tiered pricing as “a strategy where unit prices decrease as order quantities increase”. What it asks of the buyer is left for the buyer to work out.

A tier table invites you to set 5.00 beside 4.60 and feel the 8 per cent. That leaves out what the tier makes you do. The extra units are not new demand. They are your next order's units bought one order early, and on a big enough tier the order after that as well. You pay for them months sooner and they sit on your shelf for those months. That is the cost. The risk is that demand moves before they sell.

The discount is also smaller once the goods have landed. Freight is charged by weight and volume, not by what the goods cost, so a cheaper unit costs exactly as much to ship. In the example below the middle tier is 8 per cent off the supplier's price and 6.8 per cent off the landed cost.

A worked price break with three tiers

This is an example with round numbers, not a customer. A product sells 6 units a day and you normally order 90 days at a time, 540 units. The supplier's list reads 500 to 999 units at 5.00, 1,000 to 1,999 at 4.60, and 2,000 and up at 4.30, with the price applying to every unit on the order. The minimum is the first row's 500, so the 540 you need already clears it. Freight adds 0.90 a unit at any tier. Your money costs 1 per cent a month and storage 0.05 a unit a month. Both are placeholders for your own figures: the rate on your credit line, or what the cash would earn in ads, and your warehouse invoice divided by the units on it. VAT and duty are left out.

	540 at 5.00, what you need	1,000 at 4.60	2,000 at 4.30
Paid to the supplier on this order	2,700	4,600	8,600
Units over what you need	0	460	1,460
Extra days of sales bought	0	77	243
Saving against 5.00 on every unit	0	400	1,400
Cost of holding the extra units	0	145	845
Gain if every unit sells	0	255	555
Unsold units that wipe the gain out	none	about 43, 9% of the extra	about 94, 6% of the extra

The middle tier saves 400 and costs 145 to hold. Each of its 460 extra units would otherwise have come on your next order, 90 days later, so each is paid for and stored three months early: 460 × 3 months × (5.50 landed × 1% + 0.05) = 145. What is left, 255, survives until about 43 of those units fail to sell. Each unsold one costs 5.90, the 4.60 and 0.90 you paid for it plus the 0.40 saving you counted on it and never got.

Two thousand units looks better and is the riskier choice. It buys 243 extra days, eight months, so its units reach three orders ahead, and the furthest of them are bought nine months early. Holding costs 845: 540 of the extra units are three months early, 540 six months and the last 380 nine, 8,280 unit-months × (5.20 landed × 1% + 0.05). The gain left is 555, and about 94 unsold units take all of it, 6 per cent of the extra rather than 9. It is a bet that a sales rate measured over the last couple of months holds for the next eight. On a product that sells steadily all year, it might. On anything with a season, eight months runs past the end of it, and the leftovers become the subject of the dead stock page.

How to run it on your own price list

Gain from a tier = price gap × every unit on the order − the cost of holding the extra units.
Holding cost = each extra unit × months bought early × (landed cost × your monthly cost of money + storage a month).
Unsold units it can absorb = gain ÷ (price before the break + freight a unit).

Months early is the only part that takes thought. Split the extra units into the orders they would otherwise have come on. A unit from your next order is early by one gap between orders, a unit from the order after that by two, and so on. Then look at the last line and ask whether you would be surprised to see that many units left over. If you would, take the tier. If that many leftovers sounds like an ordinary year for this product, the discount is paying you too little to carry its risk.

The surplus-days check on the minimum order quantity page is the quick version of this test. The sum above adds the money, and the money is what tells two tiers apart.

When the higher tier is a bad bet

What is true of the product	What it does to the sum
Sells steadily all year	The example's case. The sum is worth trusting as it stands
Seasonal, or riding a trend	The extra days can run past the season, and every unit that does is an unsold one in the last line
New, with a few months of sales or less	There is no reliable rate to divide by, so the extra days cannot be counted. Pay the dearer price and learn the rate first
Cash already promised to the next container	The cost of money stops being the question and whether the order gets paid becomes it. See how much the next container ties up and whether to borrow for it
The extra units fill a container you pay for anyway	Freight a unit may fall, which adds to the saving. Whether to fill the box is the same trade from the freight side

What to ask the supplier before you decide

Ask whether the tier price covers every unit on the order or only the units above the break. The example assumes every unit. If only the units past 1,000 get the lower price, ordering exactly 1,000 saves you almost nothing, and the sum has to be run on the units above the break alone.

Find out, too, whether the break counts per product or across the whole order. Across the order, several products together may reach it without any one of them being overbought, which is the best version of a price break there is. And ask whether the supplier will hold the tier price against a yearly volume shipped on your dates. Some will, since the volume is what they are pricing.

What Restocio does with a price break, and what it does not

Restocio does not model price tiers. Each product carries one purchase price per supplier with no quantity attached, so the app cannot tell you whether a tier pays, and it knows neither your cost of money nor your storage bill. The sum on this page is yours to run by hand.

What it does hold are the supplier's floors. On the Suppliers page each supplier has an MOQ per product that every product from them inherits, a product can carry its own minimum that overrides it, and a pack size rounds the quantity up to whole cartons after the minimum. The recommendation is rounded to those, and the units the rounding adds go on the boat, or on the next route in line when the boat is switched off. That is why a price break should never be typed in as a minimum to make the app order it. A minimum is a floor, so every later order would round up to the tier as well, including the ones where it does not pay.

When you do take a tier, type its quantity over the recommendation on the Replenishment row before you create the order. Once the order is placed, the extra units count as on the way, so the next recommendations shrink by them rather than buying those days twice. And when the order goes out, Send order to supplier on the Purchase Orders page leaves prices off the supplier's copy by default, so a larger volume can reopen the price instead of restating the old one. That is the moment to ask for the tier.

Common questions

Is a volume discount from a supplier worth ordering more for?

Only if the discount across the whole order is bigger than what the extra units cost you to hold until they sell, with room left for some that never do. Work out how many extra days of sales the tier buys, what holding those units costs in cash and storage, and how many unsold units would wipe out what is left. If you would be surprised to see that many left over, take it.

How do I work out the cost of holding the extra units?

Each extra unit would otherwise have come on a later order, so it is bought early by the gap between your orders, or by two gaps if it belongs to the order after that. Multiply the units by the months early, then by the landed cost times your monthly cost of money plus storage a month. In the example on this page, 460 units three months early at 5.50 landed, 1 per cent a month and 0.05 storage, comes to 145.

Does the tier price apply to every unit or only the units above the break?

That depends on the supplier, so ask before you do the sum. If the whole order gets the tier price, ordering exactly at the break earns the full discount. If only the units above the break get it, ordering exactly at the break earns almost nothing, and the sum has to be run on the units past it.

Should I take a quantity discount when cash is tight?

The holding cost in the sum assumes you can find the money at your normal rate. If you cannot, the real question is whether the next order gets paid at all, and a tier that puts 1,900 or 5,900 more on the supplier's invoice today, before freight, can be the wrong move even when the arithmetic says it saves money.

Can Restocio tell me whether a price break is worth it?

No. It holds one purchase price per product and supplier, with no quantity tiers, and it does not know your cost of money or storage. It does hold the supplier's minimum and pack size and rounds the recommendation to them. To take a tier, type the quantity on the Replenishment row before you create the order, rather than entering the break as a minimum, which would round up every later order too.

Sources

Every source below was opened and read on the date shown against it. Rules, rates and schedules change, so check the current page before you act on a number that matters. If anything here is out of date or wrong, tell us and we will correct it.

Alibaba.com Seller Blog, Tiered pricing MOQ structures for volume-based procurement (no publication date shown) (read 21 October 2026)

Marcus Volsted

Co-founder, Restocio

Marcus co-founded Restocio and works on it daily with a Swedish importer who plans their purchasing in it every working day. Restocio is built in Sweden by two founders, one Swedish and one Danish, and Marcus is the Danish one. Why we are building it.