MOQ vs price breaks. Is the discount worth it?
The best order quantity under price breaks is the one with the lowest total annual cost: purchase price plus the cost of holding stock plus the cost of placing orders. Enter your supplier's price breaks, annual demand, order cost and holding cost, and this calculator compares every break and recommends the quantity to order.
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| Price | Order qty | Holding + ordering | Annual total |
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All-units discounts: the break price applies to the whole order. For each break, the order quantity is the economic order quantity at that price, moved up to the break's minimum or down to just below the next break if it falls outside. Annual total = demand × price + (quantity ÷ 2) × price × holding % + (demand ÷ quantity) × cost per order.
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Three steps. One clear answer.
- 01
Enter each price break: the minimum order quantity and the unit price that goes with it.
- 02
Add your annual demand, the fixed cost of placing one order and your holding cost as a % of price per year.
- 03
Read the best order quantity, its total annual cost and how much it saves against the smallest break.
This is the quantity-discount economic order quantity model with all-units discounts. For each break at price P, EOQ = √(2 × D × S ÷ (h × P)), where D is annual demand, S the cost per order and h the holding cost rate. If the EOQ is below the break's minimum, the order quantity Q is raised to the minimum; if it is above the next break, Q is set just below that break. Annual total = D × P + (Q ÷ 2) × P × h + (D ÷ Q) × S. The break with the lowest annual total is recommended, and the saving is measured against the smallest break.
Results are estimates to support your decisions. For binding figures, ask our team or your customs broker.
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Straight answers.
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anirudh@sourcesquid.coShould I always order at the lowest price break?
No. A bigger order lowers the unit price but raises the stock you hold, and holding stock costs money through capital, storage, insurance and obsolescence. The best break is the one with the lowest total annual cost.
What holding cost percentage should I use?
Many companies use 20 to 30% of the unit price per year, covering the cost of capital, storage, insurance, handling and the risk of obsolescence. Use a higher figure for fashion, electronics or anything with a short shelf life.
What counts as the cost per order?
Everything you pay once per order regardless of size: purchasing admin, pre-shipment inspection, fixed freight and clearance charges, and receiving. For imports from Asia this is often a few hundred dollars.
How do I get the lower price without holding so much stock?
Ask the supplier for a blanket order: commit to the larger annual quantity at the lower price, with scheduled call-offs delivered in smaller batches. Many suppliers agree when the forecast is reliable.
What is the difference between MOQ and EOQ?
MOQ is the smallest order a supplier will accept. EOQ is the order size that minimises your own holding and ordering costs. The right order quantity respects the MOQ and sits as close to your EOQ as the price breaks allow.
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