It might be better to customize the product entity and continue to use the oob product entity rather than custom entity.
Using CRM product catalog would let you take advantage of other integral CRM sales module and also use the existing reports for analysis.
As for volume discounts, you can possibly create Discount lists in CRM or may be write custom plugins to achieve the calculations you need.
CRM provides a lot of scope for customization and using its various tools you can achieve the best of both (inherent features as well as custom needs)
HTH
Sam
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