Tiered pricing looks like a discount ladder. It is really a cash flow decision dressed up as a price list. The question is never "how cheap can I get it" — it is "how much capital can I afford to have sitting in a warehouse".
A typical ladder runs from a starter band to a distributor band, with the unit price dropping as volume rises. The percentage off is the visible part. The invisible part is what that volume does to your working capital.
| Tier | Quantity | What it really costs you |
|---|---|---|
| Starter | 20 – 99 | Low capital lock-up, highest unit cost. Good for testing demand. |
| Trade | 100 – 499 | Meaningful discount, but you now need storage and a sell-through plan. |
| Distributor | 500 – 1,999 | Best margin, but you are now forecasting months ahead. |
The most common mistake is jumping a tier to capture a better unit price, before you have proven you can sell the volume. A 35% discount on stock you cannot move is worse than a 15% discount on stock that sells in three weeks.
Work backwards instead. How many units do you sell per month, realistically, in your worst month? Buy that number, not your best month's number.