The formula
total = units × price × (1 − discount of the tier reached)
What it means
On a volume scale the highest tier your quantity reaches is the one that applies, and discounts do not stack: buying 120 units with tiers of 5, 12 and 20% you pay at 20, not at the sum. The interesting part is not that sum but the one next to it: how many units short of the next tier you are, and whether buying them comes out cheaper in total, which is counterintuitive and happens often.
How to work it out by hand
- Sort the tiers from smallest to largest quantity
- Find the highest one whose minimum you reach
- Apply its discount to the unit price
- Multiply by the units
What is worth knowing
Before moving up a tier to catch the discount, two things this calculator does not know are worth checking: whether you will use those extra units and what it costs to keep them. A 12% discount that forces you to buy three times the stock ties up cash and takes up warehouse space, and the holding cost eats the saving. That is what the economic order quantity and inventory turnover answer, and they are the other half of the question.