Personal Finance

What do you call this? (the More You Buy, The More You Save)

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  • Oct 10th, 2018 11:14 pm
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[OP]
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Sep 5, 2010
1984 posts
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Toronto

What do you call this? (the More You Buy, The More You Save)

Wondering if there has a word for the following concept which is used in retail and business: the more you buy, the more you save.

For example, if you buy 1 chicken, you pay $8, but if you buy 2 chickens, you pay $15 (instead of $16)

If you pay monthly for a gym membership, you pay $50 but if you pay for a full 12 months in advance , you pay $420 total, thus saving you $120.

I just want to know if there is a word for this saving concept.
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[OP]
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Sep 5, 2010
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Toronto
Hanimal, good point but I thought that (and economies of scope) are more related to to production rather than sales? In other words, a shoe factory can make 1000 shoes at a cheaper price than it costs them to produce one per of shoes.

In principle, the concept sounds the same, but they are used for two different stages/areas (sales vs. manufacturing)
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[OP]
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Sep 5, 2010
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Toronto
Actually you may be right. According to that link you posted:

“Another source of scale economies is the possibility of purchasing inputs at a lower per-unit cost when they are purchased in large quantities.”
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Oct 4, 2009
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Woodbridge905 wrote:
Oct 8th, 2018 10:50 pm
If you pay monthly for a gym membership, you pay $50 but if you pay for a full 12 months in advance , you pay $420 total, thus saving you $120.

I just want to know if there is a word for this.
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Economy of scale... Doesn't that already happen when the commercial chicken farmer increases production (automates/increases efficiency etc), lowers price, then sells in bulk to large retailers?

@ the retail end buyer level... Sounds like a bulk discount.
Buy 2 i'll give you 5% off! Type of thing...
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Sep 19, 2013
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UrbanPoet wrote:
Oct 9th, 2018 10:42 am
Economy of scale... Doesn't that already happen when the commercial chicken farmer increases production (automates/increases efficiency etc), lowers price, then sells in bulk to large retailers?

@ the retail end buyer level... Sounds like a bulk discount.
Buy 2 i'll give you 5% off! Type of thing...
I agree. Economies of scale is on the business side. I would call this - volume discount or as mentioned above bulk discount.
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Aug 18, 2008
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Isn't this concept just variants of Bulk Purchasing?
Bulk purchasing is the purchase of much larger quantities than the usual, for a unit price that is lower than the usual.

[...]

Bulk purchasing is when a consumer captures part of the benefits of economy of scale by doing with the retailer what the retailer does with the wholesaler: paying a lower price per unit in exchange for purchasing much larger quantities.
I personally refer to these sales as tiered savings - you get different rates depending on the amount, just like our tax system.
Newbie
Jun 5, 2017
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Vancouver
It’s second degree price disicrimination.

The reason we RFDers can find stacking deals is because companies try different price discriminate techniques(cash back, coupon, loyalty, bulk) targeting different people to have the most consumer surplus while keeping sales numbers. The company still make more despite “losing” money on RFDers.
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May 8, 2009
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@Woodbridge905 I'd call it a marketing scam.

Really...the more you don't spend, the more you save.

You may get "better bang for your buck", more value, lower unit cost, etc. when buying a larger quantity up front. But you save whatever you don't spend.

Aside upsizing your popcorn or drink at the cinema, think about residential or small office/home office telecommunications services...
  • landline isn't a huge money maker, in fact carriers sometimes lose on the delivery cost when thrown into a bundle. Only outlet is long distance, but most landlines offer unlimited Canada/US calling. Overseas calls are hardly profitable due to interconnect fees.
  • internet can be profitable, but only on base plan. You can churn internet and maintain relatively high speeds with unlimited usage for <$35/month on residential.
  • TV is a huge revenue outlet, because subscribers will often order more channels or PPV programming. But, paid TV subscriptions are on the decline, and carriers are harvesting off its last run (paid streaming services, paid movies, paid premium sports programing). Won't be long before we see "free" (maybe ad-supported) outlets for these consumerisms become mainstream.

You can take a bundle, and get a $100 monthly bill instead of $200+, but the RFDer gets this and more for <$50 monthly for sure. De-bundle and save.

More examples...eat your meal before going to the cinema. In fact, you can even legally and legitimately drink soda and eat popcorn in the cinema parking lot. For families or roommates, get a projector and skip the cinema. Your break-even on the projector vs. movie tickets will hit within a few months over multiple viewers. Another example is to not get your phone from carrier. Wait for a killer sale, and keep your dirt cheap BYOD cellphone plan (even prepaid). Another outlet is to have your credit cards with a separate financial institution than your bank accounts, and definitely keep your investments elsewhere, too.

OP your thread title is a marketing scam. Bundling also reduces churn. Unit retail prices can certainly drop when sizing up, but you may end up with a bill above what you budgeted for.
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Jr. Member
Nov 28, 2017
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Um, a bulk discount?

The term "the More You Buy, The More You Save" is marketing bs, with a healthy share of cognitive dissonance.

The overall concept is simply to nudge you into more purchases. It can be worth it for a consumer if they truly will use all they are buying in a timely fashion, and it is worth it for the vendor because they get an additional sale without additional acquisition cost. Similar but slightly different for subscription based stuff, where the security of the longer term commitment merits a lower price.
[OP]
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Sep 5, 2010
1984 posts
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Toronto
Thanks for all the answers.


An even more important question: why does this thread have two thumbs down? Like seriously lol...
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[OP]
Deal Addict
Sep 5, 2010
1984 posts
180 upvotes
Toronto
BTW, I have a personal story related to this. In the late 90s and early 2000s, while in grade 12/13, I started a website that suddenly took off and started getting lots of visitors.

I had an advertising plan where local business could place their business. Can’t remember the exact pricing details but hr was something like this:

1 month plan. : $20
6 month plan : $120
12 month plan : $240

So one day, one of my regular site visitors (and a distant friend) private messaged me and said ‘your 12 month plan makes no sense. It is the same as your 1 month plan, so why would they commit to 12 months plan when they can just pay month by month and opt out anytime if they don’t like it. You have to fix it so that your 6 month plan is cheaper than if they were to pay monthly , and they 1 year plan even cheaper’

I went with that simple advise and it got me so much more business.
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May 8, 2009
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Woodbridge905 wrote:
Oct 10th, 2018 2:55 pm
Thanks for all the answers.


An even more important question: why does this thread have two thumbs down? Like seriously lol...
  1. you're not asking for advice for your own personal finances
  2. you're not discussing news, changes, events in the industry
  3. you're not bringing valuable information to the table

The forums are n00b-friendly, but you're not trying to "solve" anything. You're essentially asking a rhetorical question. You already know how it works, hence your personal story about a website from a couple decades ago...
Woodbridge905 wrote:
Oct 10th, 2018 5:21 pm
BTW, I have a personal story related to this. In the late 90s and early 2000s, while in grade 12/13, I started a website that suddenly took off and started getting lots of visitors.

I had an advertising plan where local business could place their business. Can’t remember the exact pricing details but hr was something like this:

1 month plan. : $20
6 month plan : $120
12 month plan : $240

So one day, one of my regular site visitors (and a distant friend) private messaged me and said ‘your 12 month plan makes no sense. It is the same as your 1 month plan, so why would they commit to 12 months plan when they can just pay month by month and opt out anytime if they don’t like it. You have to fix it so that your 6 month plan is cheaper than if they were to pay monthly , and they 1 year plan even cheaper’

I went with that simple advise and it got me so much more business.
In the examples that I've given, it makes business sense to offer "bundle" or "lock-in" discounts. It stimulates business and increases revenue. It also gets consumers to spend more...at least with one merchant.
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