My school recently bought all students chromebooks and it got me thinking. If they can buy 5000 chromebooks for 20$ a pop, why does it cost me 80 to buy one individually? what am i missing?
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Manufacturers/retailers are able to save overhead costs on packaging, shipping, and handling when you buy in bulk.
Some of it is what’s known as “economy of scale.” When you buy 5,000 Chromebooks, the company can ship them all at once. Running a shipping truck costs (essentially) fixed amount of money, so every additional Chromebook on the truck reduces the shipping cost per Chromebook. This also applies to things like packaging. If you can package all of the Chromebooks into a large box, you can save money versus packaging them all individually.
Some of it is also a desire to get more business. If I offer bulk discounts, I’m encouraging people to purchase my products in bulk. If I can convince someone to buy 100 Chromebooks instead of 85, I can make less profit per Chromebook and still make more total money.
Sometimes, products make more money for things like repairs and customer service. In that case, the goal is to get your product into as many hands as possible. I don’t know for sure, but I would bet that your school has some sort of software that allows them to manage all of those Chromebooks. This is likely costing them a monthly subscription, meaning that you can afford to make less on the sale of the Chromebook if you know you’ll make it up in monthly subscription costs.
The price you pay is the price for the item, plus the price to sell you the item, plus the price to package the item, plus the price to transport the item to you, plus … .
All these costs are bundled together into one number to make it easy for you. But, if you can impact some of these other costs, you can get a lower price. The price to sell the item is likely a factor in the chromebook example. The packaging and transport costs are likely more of a factor in the Costco situation.
You’ve gotten other good answers on bulk purchasing generally. The thing that I’d add is that putting 5,000 Acer (or whichever brand) Chrombooks in the hands of students likely has additional benefits to the manufacturer, such as selling additional products to the students, taking a share of software subscriptions or pre-loaded software on the device, being able to sell student data, etc. $20 may be under cost to get the other benefits to being the Chrombook provider to the school.
As others mentioned there are things like software agreements, and educational discounts.
There are also direct discounts since you as a consumer, generally cannot get the same price that a store would buy the product for from the manufacturer.
If you walk into Best Buy and spend $80 on a chrome book, Best Buy didn’t buy it from Acer for $80.
Acer may sell a direct to consumer version on their website but it’ll be the same price(or close) to retail as to not undercut their retail outlets since this gives Acer higher profits.
There are also things like transport and package costs. Sending 10 laptops to 20 different stores in retail packing that looks nice for customers cost more than sending 200 laptops to one school in the most basic cardboard boxes possible.
Unsure if laptops do this, but in some markets shelf space is contested. To display a product at a market companies will be in discussions with stores to have bigger displays, more of their products on shelves, exclusive deals, etc. With bulk orders all of that is eliminated.
A school buying hundreds or thousands of laptops can directly ask Acer, or someone farther up the supply chain about buying pallets full of laptops.
One thing the other answers have missed out is the Cost of Customer Acquisition (CoCA).
If you spent $1million on advertising and it gets you 25,000 customers, it’s cost you $40 to acquire each customer. ($1,000,000 ÷ 25,000 = $40pp).
So if I say I’ll take 5,000 laptops, that’s saved you 5,000 x $40. Or $200,000.
So then I asked for that money off as a discount.
But maybe… maybe they actually give me a discount of $25,000 instead. That’s right: more.
Why? Because if they can get 5,000 kids to love Chromebooks, they might buy one again later… so the CoCA just went down because kids are impressionable.
British banks will happily lose money on university students because British people never change banks. So once they get you as a poor student, they’ll have you for life as a wealthy worker.
Logistics.
Paying someone to move 100 items once a day costs more than paying them to move 5,000 items once a week. Buying in bulk allows for bigger shipments, less often, which allows for cheaper logistics.
The other part people are missing is that purchase this size gets bid out to multiple resellers. As 5000 Chromebooks is easily a million dollar purchase. Those resellers are going to how as low as they can and still make a okay profit. As they wasnt some profit instead of no profit.
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