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Quantity breaks, 50 for $50 and 90 for $80? Or maybe there's another solution

Discussion in 'General Entrepreneur Discussion' started by biophase, Dec 4, 2018.

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  1. biophase
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    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Original Pricing
    50 for $50
    100 for $90

    I have a product that sells for 50 pieces for $50. These 50 pieces weigh just over 1/2 lb.
    I have a large size version of that product that sells 100 for $90 pieces. These 100 pieces weigh 1.1 lbs.

    So here was the issue, if you ship using the post office, anything under 1 lb ships first class mail for around $3. If it goes over 1 lb, it must go Priority Mail, about $8. So that 1 ounce is costing me $5 in shipping.

    So my original solution was to lower the weight to below 1 lb by selling 90 pieces instead of 100. So this is what my offer would have looked like:

    50 for $50 ($1 a piece)
    90 for $80 (The public instantly knows that this is under $1 a piece)

    This solved my $5 extra shipping issue.

    However, I ended up going with a different solution. We know that the public expects to pay less per piece as the quantity increases right? I purposely want to give them easy math. I've always been using the price to govern the easy math. But what if I used the quantity instead.

    So here's what I did.
    50 for $50 ($1 a piece)
    110 for $100 (The public instantly knows that this is under $1 a piece)

    The public feels like they are getting 10 free pieces now versus the past solution where they felt like they were getting each piece at a minimal discount, a few cents each.

    Why is this better? Here's the math. Let's just assume that each piece costs me $.40. And now let's look at the profit calculations.

    Original
    50 for $50 - cost 50 x $.40 = $20, $3 shipping, profit $27
    100 for $90 - cost 100 x $.40 = $40, $8 shipping, profit $42

    First solution
    90 for $80 - cost 90 x $.40 = $36, $3 shipping, profit $41 (profit is actually less than before)
    90 for $85 - cost 90 x $.40 = $36, $3 shipping, profit $46 (but this didn't look like a good deal right?)

    Second solution
    110 for $100 - cost 110 x $.40 = $44, $8 shipping, profit $48

    The key is that for the extra 10 pieces, it was going to cost me $4 more, but I got an extra $6 in revenue. Also, it's too early to tell if the thought of getting 10 free pieces converts better than getting a few cents off per piece.
     
  2. RazorCut
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    RazorCut Gold Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    You know your product and therefore your customer way better than me but from an overhead view from someone who has shipped 100,000's of eCommerce orders:

    I would use something like a 50, 75, 150 and a 200 or 300 option. If priority mail is faster I'd use that as the selling point on heavier quantities rather than just price as sometime time is more important than financial gain to a customer. If they want 100 they can buy 2 x 50.

    I'd also include a line by the price of each one that says how much per piece it is.

    $1 each
    89c each
    $0.75 each

    or however you want to word it so they don't have to make the calculations themselves.

    Will be interesting to see what your customers prefer on your new price points.
     

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