On the way to a recent barbecue, I dropped by a local gourmet market to pick up ingredients to make my famous Korean-style ribs. While the butcher was initially thrilled with my unexpectedly large 30 pound order, his mood soured when I asked him to thinly slice the ribs “flanken style” (cut parallel to the ribs). After 20 minutes of intense slicing (and several reminders to “slice it thinner”), the meat was ornately packaged and ready to go. Then, out of curiosity – let’s call it “research” – I asked if I was entitled to a volume discount since I was buying so much. Without giving it a second thought, the butcher chopped the per pound price from $8 to $6. As a consumer I appreciated the $60 savings—but as a consultant who helps businesses optimize their pricing, I wondered if the butcher realized how much of the store’s operating profit margin disappeared due to his hastily-considered discount.
When It’s Wise to Offer Volume Discounts
Are you like a pharmacy, or a butcher shop?
October 25, 2013
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Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Marketing Essentials. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
Learn how to communicate with your customers—strategically.