diff --git a/backend/app/controllers/api/v1/orders_controller.rb b/backend/app/controllers/api/v1/orders_controller.rb
new file mode 100644
index 0000000..f8afaf2
--- /dev/null
+++ b/backend/app/controllers/api/v1/orders_controller.rb
@@ -0,0 +1,36 @@
+class Api::V1::OrdersController < ApplicationController
+  def index
+    @orders = Order.all
+    render json: @orders
+  end
+
+  def create
+    @order = Order.new(order_params)
+
+    if @order.save
+      render json: {
+        message: 'Order Successfully Placed!',
+        order: @order
+      }
+    else
+      render json: {
+        message: 'Failed to place order.',
+        errors: []
+      }, status: :bad_request
+    end
+  end
+
+  def prices
+    @order = Order.new(order_params)
+    prices = OrderPriceService.new.calculate_prices(@order)
+    render json: prices
+  end
+
+  private
+
+  def order_params
+    params.require(:order).permit(
+      order_items_attributes: %i[product_id quantity]
+    )
+  end
+end
diff --git a/backend/app/controllers/api/v1/products_controller.rb b/backend/app/controllers/api/v1/products_controller.rb
index 71e6ff4..d94b083 100644
--- a/backend/app/controllers/api/v1/products_controller.rb
+++ b/backend/app/controllers/api/v1/products_controller.rb
@@ -1,6 +1,6 @@
 class Api::V1::ProductsController < ApplicationController
   def index
-    products = ProductService.new.available_products
+    products = Product.all
     render json: products
   end
 end
diff --git a/backend/app/models/order.rb b/backend/app/models/order.rb
new file mode 100644
index 0000000..acd1d69
--- /dev/null
+++ b/backend/app/models/order.rb
@@ -0,0 +1,38 @@
+class Order < ApplicationRecord
+  validates :shipping_price, numericality: { greater_than_or_equal_to: 0 }
+  validates :total_price, numericality: { greater_than: 0 }
+
+  has_many :order_items, dependent: :destroy, autosave: true
+  accepts_nested_attributes_for :order_items, reject_if: :all_blank
+
+  before_validation :update_prices
+  before_validation :ensure_items_present
+
+  def as_json(_options)
+    super(
+      include: {
+        order_items: {
+          only: %i[product_id quantity],
+          methods: %i[product_name unit_price]
+        }
+      }
+    )
+  end
+
+  private
+
+  def update_prices
+    prices = OrderPriceService.new.calculate_prices(self)
+    self.shipping_price = prices[:shipping_price]
+    self.total_price = prices[:total_price]
+    true
+  end
+
+  def ensure_items_present
+    errors.add(:order_items, 'must contain at least 1 item') unless total_qty.positive?
+  end
+
+  def total_qty
+    order_items.map(&:quantity).sum
+  end
+end
diff --git a/backend/app/models/order_item.rb b/backend/app/models/order_item.rb
new file mode 100644
index 0000000..d96939d
--- /dev/null
+++ b/backend/app/models/order_item.rb
@@ -0,0 +1,12 @@
+class OrderItem < ApplicationRecord
+  belongs_to :order
+  belongs_to :product
+
+  default_scope { includes(:product) }
+
+  validates :order, :product, presence: true
+  validates :quantity, numericality: { greater_than: 0, only_integer: true }
+
+  delegate :name, to: :product, prefix: :product
+  delegate :unit_price, to: :product
+end
diff --git a/backend/app/models/product.rb b/backend/app/models/product.rb
new file mode 100644
index 0000000..583d216
--- /dev/null
+++ b/backend/app/models/product.rb
@@ -0,0 +1,4 @@
+class Product < ApplicationRecord
+  validates :name, presence: true
+  validates :unit_price, numericality: { greater_than: 0 }
+end
diff --git a/backend/app/services/order_price_service.rb b/backend/app/services/order_price_service.rb
new file mode 100644
index 0000000..c0fb638
--- /dev/null
+++ b/backend/app/services/order_price_service.rb
@@ -0,0 +1,20 @@
+class OrderPriceService
+  def calculate_prices(order)
+    total_qty = 0
+    shipping_price = 30
+    total_price = 0
+
+    order.order_items.each do |item|
+      total_qty += item.quantity
+      total_price += item.quantity * item.unit_price
+    end
+
+    shipping_price = 0 if total_qty >= 10
+    total_price *= 0.9 if total_qty > 20
+
+    {
+      total_price: total_price + shipping_price,
+      shipping_price: shipping_price
+    }
+  end
+end
diff --git a/backend/app/services/product_service.rb b/backend/app/services/product_service.rb
deleted file mode 100644
index 63e67cb..0000000
--- a/backend/app/services/product_service.rb
+++ /dev/null
@@ -1,20 +0,0 @@
-# Service for retrieving available products
-class ProductService
-  # DTO Class for each product
-  # type: String - Product type to be displayed
-  # cost: Integer - Cost of product
-  Product = Struct.new(:type, :cost)
-
-  # Dummy products.
-  AVAILABLE_PRODUCTS = [
-    Product.new('High Quality', 20),
-    Product.new('Premium', 30)
-  ].freeze
-
-  # Retrieve all available products
-  # In reality this would be likely be retrieved from external
-  # service/database instead of having hardcoded products
-  def available_products
-    AVAILABLE_PRODUCTS
-  end
-end
diff --git a/backend/config/routes.rb b/backend/config/routes.rb
index 1ca712b..26eaecc 100644
--- a/backend/config/routes.rb
+++ b/backend/config/routes.rb
@@ -3,6 +3,9 @@
   namespace :api do
     namespace :v1 do
       get 'products' => 'products#index'
+      get 'orders' => 'orders#index'
+      post 'orders' => 'orders#create'
+      post 'orders/calculate-price' => 'orders#prices'
     end
   end
 end
diff --git a/backend/db/migrate/20200709103721_create_orders.rb b/backend/db/migrate/20200709103721_create_orders.rb
new file mode 100644
index 0000000..d0e35c6
--- /dev/null
+++ b/backend/db/migrate/20200709103721_create_orders.rb
@@ -0,0 +1,10 @@
+class CreateOrders < ActiveRecord::Migration[6.0]
+  def change
+    create_table :orders do |t|
+      t.integer :shipping_price, null: false
+      t.float :total_price, null: false
+
+      t.timestamps
+    end
+  end
+end
diff --git a/backend/db/migrate/20200710070619_create_products.rb b/backend/db/migrate/20200710070619_create_products.rb
new file mode 100644
index 0000000..9cd17fe
--- /dev/null
+++ b/backend/db/migrate/20200710070619_create_products.rb
@@ -0,0 +1,10 @@
+class CreateProducts < ActiveRecord::Migration[6.0]
+  def change
+    create_table :products do |t|
+      t.string :name, null: false
+      t.float :unit_price, null: false
+
+      t.timestamps
+    end
+  end
+end
diff --git a/backend/db/migrate/20200710113332_create_order_items.rb b/backend/db/migrate/20200710113332_create_order_items.rb
new file mode 100644
index 0000000..b636c34
--- /dev/null
+++ b/backend/db/migrate/20200710113332_create_order_items.rb
@@ -0,0 +1,11 @@
+class CreateOrderItems < ActiveRecord::Migration[6.0]
+  def change
+    create_table :order_items do |t|
+      t.references :order, null: false, foreign_key: true
+      t.references :product, null: false, foreign_key: true
+      t.integer :quantity, null: false
+
+      t.timestamps
+    end
+  end
+end
diff --git a/backend/db/schema.rb b/backend/db/schema.rb
index b10373b..c2194a5 100644
--- a/backend/db/schema.rb
+++ b/backend/db/schema.rb
@@ -10,9 +10,35 @@
 #
 # It's strongly recommended that you check this file into your version control system.
 
-ActiveRecord::Schema.define(version: 0) do
+ActiveRecord::Schema.define(version: 2020_07_10_113332) do
 
   # These are extensions that must be enabled in order to support this database
   enable_extension "plpgsql"
 
+  create_table "order_items", force: :cascade do |t|
+    t.bigint "order_id", null: false
+    t.bigint "product_id", null: false
+    t.integer "quantity", null: false
+    t.datetime "created_at", precision: 6, null: false
+    t.datetime "updated_at", precision: 6, null: false
+    t.index ["order_id"], name: "index_order_items_on_order_id"
+    t.index ["product_id"], name: "index_order_items_on_product_id"
+  end
+
+  create_table "orders", force: :cascade do |t|
+    t.integer "shipping_price", null: false
+    t.float "total_price", null: false
+    t.datetime "created_at", precision: 6, null: false
+    t.datetime "updated_at", precision: 6, null: false
+  end
+
+  create_table "products", force: :cascade do |t|
+    t.string "name", null: false
+    t.float "unit_price", null: false
+    t.datetime "created_at", precision: 6, null: false
+    t.datetime "updated_at", precision: 6, null: false
+  end
+
+  add_foreign_key "order_items", "orders"
+  add_foreign_key "order_items", "products"
 end
diff --git a/backend/db/seeds.rb b/backend/db/seeds.rb
index 1beea2a..2b79f19 100644
--- a/backend/db/seeds.rb
+++ b/backend/db/seeds.rb
@@ -1,7 +1,7 @@
-# This file should contain all the record creation needed to seed the database with its default values.
-# The data can then be loaded with the rails db:seed command (or created alongside the database with db:setup).
-#
-# Examples:
-#
-#   movies = Movie.create([{ name: 'Star Wars' }, { name: 'Lord of the Rings' }])
-#   Character.create(name: 'Luke', movie: movies.first)
+# In lieu of a CMS for managing products, we will just seed the db
+Product.create(
+  [
+    { name: 'High Quality', unit_price: 20 },
+    { name: 'Premium', unit_price: 30 }
+  ]
+)
diff --git a/backend/test/controllers/api/v1/orders_controller_test.rb b/backend/test/controllers/api/v1/orders_controller_test.rb
new file mode 100644
index 0000000..0321840
--- /dev/null
+++ b/backend/test/controllers/api/v1/orders_controller_test.rb
@@ -0,0 +1,51 @@
+class Api::V1::OrdersControllerTest < ActionDispatch::IntegrationTest
+  test 'should return expected orders in json format' do
+    expected = Order.all
+    get api_v1_orders_path
+    assert_response :ok
+    assert_equal expected.to_json, @response.body
+  end
+
+  test 'should create order' do
+    assert_difference 'Order.count', 1 do
+      post api_v1_orders_path, params: {
+        order_items_attributes: [
+          { product_id: products(:one).id, quantity: 1 }
+        ]
+      }, as: :json
+    end
+    assert_includes @response.body, products(:one).name
+    assert_response :ok
+  end
+
+  test 'should not create order without items' do
+    assert_no_difference 'Order.count', 1 do
+      post api_v1_orders_path, params: { order_items_attributes: [] }, as: :json
+    end
+    assert_response :bad_request
+  end
+
+  test 'should calculate price' do
+    expected = { 'shipping_price' => 30, 'total_price' => 40 }
+    post api_v1_orders_calculate_price_path, params: {
+      order_items_attributes: [
+        { product_id: products(:one).id, quantity: 1 }
+      ]
+    }, as: :json
+    json = JSON.parse(@response.body)
+    assert_equal expected['shipping_price'], json['shipping_price']
+    assert_equal expected['total_price'], json['total_price']
+    assert_response :ok
+  end
+
+  test 'should calculate price with no items' do
+    expected = { 'shipping_price' => 30, 'total_price' => 30 }
+    post api_v1_orders_calculate_price_path, params: {
+      order_items_attributes: []
+    }, as: :json
+    json = JSON.parse(@response.body)
+    assert_equal expected['shipping_price'], json['shipping_price']
+    assert_equal expected['total_price'], json['total_price']
+    assert_response :ok
+  end
+end
diff --git a/backend/test/controllers/api/v1/products_controller_test.rb b/backend/test/controllers/api/v1/products_controller_test.rb
index 04fd980..32180be 100644
--- a/backend/test/controllers/api/v1/products_controller_test.rb
+++ b/backend/test/controllers/api/v1/products_controller_test.rb
@@ -2,14 +2,9 @@
 
 class Api::V1::ProductsControllerTest < ActionDispatch::IntegrationTest
   test 'should return expected products in json format' do
-    expected = ProductService::Product.new('DummyProduct', 42)
-    ProductService
-      .any_instance
-      .stubs(:available_products)
-      .returns([expected])
-
+    expected = Product.all
     get api_v1_products_path
     assert_response :ok
-    assert_equal [expected].to_json, @response.body
+    assert_equal expected.to_json, @response.body
   end
 end
diff --git a/backend/test/fixtures/order_items.yml b/backend/test/fixtures/order_items.yml
new file mode 100644
index 0000000..e82c5a8
--- /dev/null
+++ b/backend/test/fixtures/order_items.yml
@@ -0,0 +1,5 @@
+# Read about fixtures at https://api.rubyonrails.org/classes/ActiveRecord/FixtureSet.html
+item_one:
+  product: one
+  order: order_one
+  quantity: 1
\ No newline at end of file
diff --git a/backend/test/fixtures/orders.yml b/backend/test/fixtures/orders.yml
new file mode 100644
index 0000000..654699f
--- /dev/null
+++ b/backend/test/fixtures/orders.yml
@@ -0,0 +1,4 @@
+# Read about fixtures at https://api.rubyonrails.org/classes/ActiveRecord/FixtureSet.html
+order_one:
+  shipping_price: 30
+  total_price: 50
\ No newline at end of file
diff --git a/backend/test/fixtures/products.yml b/backend/test/fixtures/products.yml
new file mode 100644
index 0000000..d0e2b27
--- /dev/null
+++ b/backend/test/fixtures/products.yml
@@ -0,0 +1,8 @@
+# Read about fixtures at https://api.rubyonrails.org/classes/ActiveRecord/FixtureSet.html
+one:
+  name: "Test Product"
+  unit_price: 10
+
+two:
+  name: "Test Product 2"
+  unit_price: 5
\ No newline at end of file
diff --git a/backend/test/models/order_item_test.rb b/backend/test/models/order_item_test.rb
new file mode 100644
index 0000000..a089b65
--- /dev/null
+++ b/backend/test/models/order_item_test.rb
@@ -0,0 +1,38 @@
+require 'test_helper'
+
+class OrderItemTest < ActiveSupport::TestCase
+  def setup
+    @order = Order.new
+    @product = products(:one)
+    @order_item = @order.order_items.build(
+      product: @product,
+      quantity: 1
+    )
+  end
+
+  test 'should be valid' do
+    assert @order_item.valid?
+  end
+
+  test 'should have order' do
+    @order_item.order = nil
+    assert_not @order_item.valid?
+  end
+
+  test 'should have product' do
+    @order_item.product = nil
+    assert_not @order_item.valid?
+  end
+
+  test 'should have quantity' do
+    @order_item.quantity = nil
+    assert_not @order_item.valid?
+  end
+
+  test 'should have positive quantity' do
+    @order_item.quantity = 0
+    assert_not @order_item.valid?
+    @order_item.quantity = -10
+    assert_not @order_item.valid?
+  end
+end
diff --git a/backend/test/models/order_test.rb b/backend/test/models/order_test.rb
new file mode 100644
index 0000000..ab311c1
--- /dev/null
+++ b/backend/test/models/order_test.rb
@@ -0,0 +1,48 @@
+require 'test_helper'
+
+class OrderTest < ActiveSupport::TestCase
+  def setup
+    @product = products(:one)
+    @order = Order.new(
+      shipping_price: 10,
+      total_price: 40,
+      order_items_attributes: [
+        {
+          product_id: @product.id,
+          quantity: 2
+        }
+      ]
+    )
+    # Skip price updates to verify validation logic
+    @order.stubs(:update_prices)
+  end
+
+  test 'should be valid' do
+    assert @order.valid?
+  end
+
+  test 'should have shipping price' do
+    @order.shipping_price = nil
+    assert_not @order.valid?
+  end
+
+  test 'should not have negative shipping price' do
+    @order.shipping_price = -1
+    assert_not @order.valid?
+  end
+
+  test 'should have total price' do
+    @order.total_price = nil
+    assert_not @order.valid?
+  end
+
+  test 'should have 0 total price' do
+    @order.total_price = 0
+    assert_not @order.valid?
+  end
+
+  test 'should not have negative total price' do
+    @order.total_price = -1.0
+    assert_not @order.valid?
+  end
+end
diff --git a/backend/test/models/product_test.rb b/backend/test/models/product_test.rb
new file mode 100644
index 0000000..3d9808c
--- /dev/null
+++ b/backend/test/models/product_test.rb
@@ -0,0 +1,36 @@
+require 'test_helper'
+
+class ProductTest < ActiveSupport::TestCase
+  def setup
+    @product = Product.new(
+      name: 'High Quality',
+      unit_price: 20
+    )
+  end
+
+  test 'should be valid' do
+    assert @product.valid?
+  end
+
+  test 'should have name' do
+    @product.name = nil
+    assert_not @product.valid?
+    @product.name = ''
+    assert_not @product.valid?
+    @product.name = '   '
+    assert_not @product.valid?
+  end
+
+  test 'should have price' do
+    @product.unit_price = nil
+    assert_not @product.valid?
+  end
+
+  test 'should have positive unit price' do
+    @product.unit_price = 0
+    assert_not @product.valid?
+
+    @product.unit_price = -10
+    assert_not @product.valid?
+  end
+end
diff --git a/backend/test/services/order_price_service_test.rb b/backend/test/services/order_price_service_test.rb
new file mode 100644
index 0000000..3bde4ff
--- /dev/null
+++ b/backend/test/services/order_price_service_test.rb
@@ -0,0 +1,113 @@
+require 'test_helper'
+
+class OrderPriceServiceTest < ActiveSupport::TestCase
+  def setup
+    @product1 = products(:one) # Unit price 10
+    @product2 = products(:two) # Unit price 5
+    @order = Order.new
+  end
+
+  test 'should calculate price for empty order' do
+    expected = {
+      shipping_price: 30,
+      total_price: 30
+    }
+    assert_equal expected, OrderPriceService.new.calculate_prices(@order)
+  end
+
+  test 'should correctly calculate price for order < 10' do
+    expected = {
+      shipping_price: 30,
+      total_price: (10 * 9) + 30
+    }
+
+    @order.order_items.build(
+      product: @product1,
+      quantity: 9
+    )
+
+    actual = OrderPriceService.new.calculate_prices(@order)
+    assert_equal expected, actual
+  end
+
+  test 'should correctly calculate price for order > 10 and <= 20' do
+    expected = {
+      shipping_price: 0,
+      total_price: 10 * 20
+    }
+
+    @order.order_items.build(
+      product: @product1,
+      quantity: 20
+    )
+
+    actual = OrderPriceService.new.calculate_prices(@order)
+    assert_equal expected, actual
+  end
+
+  test 'should correctly calculate price for order > 20' do
+    expected = {
+      shipping_price: 0,
+      total_price: 210 * 0.9
+    }
+
+    @order.order_items.build(
+      quantity: 21,
+      product: @product1
+    )
+
+    actual = OrderPriceService.new.calculate_prices(@order)
+    assert_equal expected, actual
+  end
+
+  test 'should correctly calculate price for multiple line items with qty < 10 total' do
+    expected = {
+      shipping_price: 30,
+      total_price: 50
+    }
+
+    @order.order_items.build(
+      [
+        { quantity: 1, product: @product1 },
+        { quantity: 2, product: @product2 }
+      ]
+    )
+
+    actual = OrderPriceService.new.calculate_prices(@order)
+    assert_equal expected, actual
+  end
+
+  test 'should correctly calculate price for multiple line items with qty = 20 total' do
+    expected = {
+      shipping_price: 0,
+      total_price: 190
+    }
+
+    @order.order_items.build(
+      [
+        { quantity: 18, product: @product1 },
+        { quantity: 2,  product: @product2 }
+      ]
+    )
+
+    actual = OrderPriceService.new.calculate_prices(@order)
+    assert_equal expected, actual
+  end
+
+  test 'should correctly calculate price for multiple line items with qty > 20 total' do
+    expected = {
+      shipping_price: 0,
+      total_price: 210 * 0.9
+    }
+
+    @order.order_items.build(
+      [
+        { quantity: 20, product: @product1 },
+        { quantity: 2,  product: @product2 }
+      ]
+    )
+
+    actual = OrderPriceService.new.calculate_prices(@order)
+    assert_equal expected, actual
+  end
+end