Video Overview:

This model is designed to help any business that sells items in bulk or simply needs a formal way to calculate discounts when more than 1 unit is purchased. The template can be configured to account for 1-10 buckets of volume and the actual number of units can be arbitrarily large or small.

There are two main tabs. The first is a single starting price scenario with discounts that grow as the volume increases and the second tab does the same thing except add 9 more starting price scenarios to look at what the pricing / gross profits / net operating profit maybe if the starting price were to be up to 10 variations that all have volume discounts.

The user inputs are:
– Starting Sales Price per Unit
– Cost of Goods Sold per Unit
– Existing Margin per Unit (output)
– % Discount per 1 New Added Item
– Unit Increase Lever

The user can then go in and adjust all the configurations to match their specific scenario. Outputs include visuals and values for each of the 10 possible volume buckets. The formulas can easily be drug across to have more granularity than desired. Also, a linear curve function automatically calculates the total discount based on a volume input, which is based on the configuration inputs.

The key takeaway here is the model shows when the total gross profit starts to go down instead of up as discounts and volume rise and the second tab shows how this differs with various starting price points.

Additionally, there are inputs for operating costs so that the user can see their expected net operating income if their average order value is at each of the volume buckets. This makes the template very useful in determining what kind of price per unit and discounting scheme is feasible to meet goals and profit targets.