Here’s a simple way to avoid a common mistake and maybe save money when buying patches or any product which is sold with tiered or bracketed pricing (quantity discounts). We’ll illustrate this mistake with a short example as follows.
Suzy needed 170 patches for her event. She found a patch company online and their prices were as follows.
$1.00 for quantities from 100 to 199 and
$0.75 for quantities from 200 to 299.
Suzy bought 170 patches and paid $170. Makes sense, right? Now, suppose Suzy had bought 200 patches even though she only needed 170. Well, then she would have paid $0.75×200=$150. In other words, she could have bought 30 more (200) patches for $20 less money. Instead, she paid more for less. And, that is bad deal and a very common mistake. So, here’s how to avoid it.
THE BREAK-EVEN QUANTITY – Quantity discounted pricing usually includes price brackets such as the 100 to 199 quantity bracket with which Suzy was concerned. And, there is always a quantity in price brackets where the total price is the same as the total price paid at the bottom end of the next bracket up. We call that the break-even quantity. In Suzy’s case, the break-even quantity is 150 patches. Here’s why.
If Suzy had bought 150 patches she would have paid $150. And, if she had bought 200 patches she would have paid that same amount…$150. But, because Suzy wanted 170 patches, she paid $20 more than necessary.
WHAT TO DO – Many customers simply calculate the total at the bottom of the next bracket up and then buy what they need while making sure they don’t pay more than that. But, what if they can get more patches for less money? And, how many can they get? Or how many can they get for the same amount of money? Or what if they can get many more patches for the price of a few more and don’t know it? These questions are easily answered if they know what the break-even quantity is. So, here’s how to calculate it.
CALCULATING THE BREAK-EVEN POINT
It’s super easy. To determine the break-even quantity just find the total at the bottom end of the next bracket up and divide it by the unit price in your bracket. In Suzy’s case that would be ($0.75×200)/$1.00 or $150. Simple, right?
Now that you know how to find the break-even quantity, you’ll never pay more for less and that applies to all products with quantity discounts; not just patches. But, it can raise some questions. For example; what if Suzy didn’t want 30 more patches? Or, what if she was buying from a website and it didn’t give her any options except to buy 200 patches and throw away 30 if she couldn’t find a home for them? In cases such as those, Suzy should call or email the patch company and ask them to take her order by phone and keep the extra patches. That way there’s no wasted patches, the company isn’t mailing patches that might go unused, and everyone is happy!