Volume pricing is a pricing strategy where the cost per unit decreases as the quantity purchased increases. This approach encourages customers to buy larger quantities by offering discounts, making it beneficial for both buyers and sellers. Businesses often use volume pricing to boost sales and manage inventory more effectively. For example, a wholesaler might offer a lower price per item when a retailer orders 100 units instead of just 10. This strategy can help manufacturers reduce production costs and improve customer loyalty, as buyers feel they are getting a better deal when they purchase in bulk.