My Supplier Offers a Discount if I Buy More Fragrance Oil — How Do I Calculate Whether the Discount Is Worth the Risk of Slow-Moving Inventory?

The three-part test

When a supplier offers, say, 8% off if you take 5 kg of an oil instead of your usual 1 kg, the offer is visible and the costs are not. The oil will sit in your storeroom for months instead of weeks, tying up cash. And for every scent, there is some chance it stops selling — a season ends, a new scent replaces it, a stockist drops it — before the 5 kg is gone. A fair decision puts all three on the same scale: rupees.

Two of the inputs are judgements, and that is fine. Stall risk is your honest estimate that this scent stops selling before the bigger order is used up. A two-year bestseller might be 5%; a scent launched last month, 30% or more. Salvage is the share of stranded oil you could still turn into money — wax melts, testers, room-spray blends, a clearance batch. This page uses 30% as an example. The dead-stock formula assumes that if the scent stalls, it does so at a random point, leaving on average half the order. That is a simplification, but a fair one when you have no better information.

An 8% offer at four sales speeds

Here is the test on a single offer: 8% off 5 kg of an oil you normally buy by the kilo. We price it from Jasmine Fragrance Oil's listed 1 kg (₹3,923.00, ₹3.92 a gram) so the rupees are realistic, but the 8% is a hypothetical — CSI does not publish one. The holding rate is an example 2% a month, salvage an example 30%, and the stall risk rises as sales slow. Candle counts assume 16 g of oil per 200 g candle.

The saving is identical in every row: ₹1,569.20. What changes is how long the oil waits and how likely the scent is to stall while it does. A scent using 2 kg a month turns 5 kg into candles in 2.5 months; the holding cost is small and the stall risk low, so the discount is a clear win. At 1 kg a month it still pays, narrowly. At 600 g a month, the oil sits for 8.3 months, and holding cost plus expected dead stock (₹2,150.45) outweigh the saving. At 300 g a month, 5 kg is well over a year of stock, and the expected dead-stock loss is larger than the discount.

The short rule and its inputs

If you would rather not build the full table, the test collapses into a rule of thumb for the discount you need:

"Extra months" is how long the big order lasts minus how long your usual order lasts. For 5 kg against 1 kg at 600 g a month, that is 8.33 − 1.67 = 6.67 months. At the example 2% holding rate, the first term is 6.7%. With a 15% stall risk and 30% salvage, the second term is 5.25%. Together: 11.9%. An 8% offer falls short.

Read across a row and the pattern is stark: the 5 kg column is where most offers stop paying for anything but a fast seller. Read down the first column and you see why the 1 kg against 100 g decision is more forgiving — the extra months are shorter, so for moderate sellers the required break stays within reach of the bigger listed kilo savings. That is the exact decision CSI's listed packs put in front of you.

CSI's own breaks, put through the test

For most oils, the listed 1 kg costs within 1% per gram of the 100 g, so there is no discount to test: the kilo buys convenience only. But 24 oils save 5% or more, and a few 1 kg packs are fractionally dearer. The table runs five oils through the test for a scent using 300 g a month (about 19 candles) with a 15% stall risk. At those inputs the break must be at least 8.2%.

Verbena and Honeydew Melon pass with room to spare: their savings are roughly three times what the holding and risk cost. Jasmine's 8.8% break is marginal at this speed. Lavender's 3.3% and White Royal Oud's zero do not come close, so for a scent selling 300 g a month the 100 g bottle is the better buy. There are also two cases where the bigger listed pack is not the better deal at all. Honeydew Melon's 500 g already carries the full kilo rate (₹3.40 a gram), so a slow scent gets the whole break with half the stock. And Saffron Cedarwood and Sage and Cedarwood are cheaper per gram at 500 g (₹5.17) than at 1 kg (₹6.87): two 500 g packs cost ₹5,168.40 against ₹6,867.60 for the kilo.

Taking a discount safely

When the numbers say yes, a few habits keep a good discount from turning into a bad inventory position.

Seasonal scents deserve one extra adjustment. A scent that sells strongly for eight weeks and then almost stops has two speeds, not one. Use the in-season speed for the part of the order you expect to pour before the season ends, and treat anything beyond that as stock that waits eleven months for next year — which, at any sensible holding rate, is usually a loss. My Candle Sales Double During Diwali — How Early Should I Start Increasing Wax, Fragrance Oil, Wick and Jar Inventory Before the Season? covers building festive stock without carrying it into January.

Finally, a discount decision is really an inventory-limit decision. If you set a maximum months-of-stock for each scent tier — say two months for your bestsellers, one for the middle, and a single 100 g bottle for the tail — most discount offers answer themselves. My Supplier Gives Better Prices for Larger Orders but I'm Worried About Dead Stock — How Do I Decide the Maximum Inventory Worth Holding? builds those limits, and My Bestselling Fragrance Keeps Running Out — Should I Hold More Fragrance Oil Inventory than I Hold for Slower-Selling Candle Scents? covers the opposite problem, a bestseller that keeps running out.

Frequently asked questions