• Content
  • Business
  • Social Media
  • Branding
  • Ads
  • How To

What Is Tiered Pricing And How Can It Be Used?


Sellers must place a high value on listening to what their customers have to say about their products or services.Customers can be segmented into groups based on their demand and product prices can be optimized to fit their appetite for purchasing through tiered and customized pricing.

In addition to allowing you to segment your customer base, tiered pricing allows you to differentiate your product or service.As a result of having more options available, your business will be more appealing to a wider range of customers.

Tiered Pricing | A quick guide to pricing right 🪜

What Is A Tiered Pricing Model?

Sellers use tier pricing as a way to tailor the price of their products or services to their specific target markets.

COPYRIGHT_MARX: Published on https://marxcommunications.com/tiered-pricing/ by Keith Peterson on 2022-01-15T12:33:53.261Z

You can reach a broader (and more diverse) customer base by catering to a wider range of demand rates and price points by optimizing and varying your offering across the various segments.

The following is an example of this:

Unit 1: $200.00

Units 2-4: $170 each.

Units 5 through 9: $160 each

Units 10-19 cost $140 each.

Units of 20 or more: $120 each

As you can see, a greater discount is applied to the units within the various tiers as the tiers (or the demand for your product or service) increase.As a result, customers are encouraged to purchase additional units because they will receive a discount for each additional unit purchased.Is there anyone who doesn't enjoy getting a deal?

Businesses and customers who have a high demand for your product can benefit from a quantity discount.Also, it's a good way to get smaller customers to boost their orders in order to get a piece of the action.

Tiered Pricing Vs. Volume Pricing

Let's take a moment to spell out exactly what these two pricing approaches mean.

Tiered pricing is simply - means setting a minimum order quantity before moving on to the next tier.

The tier's cost only applies to the units purchased there.

Volume pricing is simply – Selling your items or services in bulk.

Once a certain number of units have been sold, ALL of the remaining inventory will be marked down to the new, lower price.

The Benefits Of Tiered Pricing Model For SaaS Businesses

Using a tiered pricing model for businesses that sell licenses, seats, or the like is a popular option for software businesses.

Because fewer units are offered at a discounted rate with each tier, the seller of the product or service makes more money with the tiered pricing model than with the volume pricing model.Look at the following charts:

Tiered graph example
Tiered graph example
Volume graph example
Volume graph example

You'll never experience a loss of profit when using a tiered pricing model.Increases in sales have led to a steady rise in revenue.To illustrate this point, we present a second graph in which you can clearly see that the total price drops significantly when a discount threshold is crossed when purchasing a certain number of units, as shown in this graph.

Because of the volume pricing method, all units are offered at a significant discount.Because the discount has been applied to each of the 10 units, your profit falls below the level of 9 units when demand reaches its peak of 10 units.This is an excellent deal for companies purchasing large quantities of units, but it's a terrible deal for the seller.

However, revenue isn't the only consideration.Other benefits of this pricing model are ideal for SaaS companies in rapid expansion.Look at this:

  • Appeal to a wider audience: by offering a variety of options for businesses of all sizes, budgets, and priorities, you'll be able to attract a wider audience.
  • When you have a pricing model that caters to a wider range of customer needs, your conversion rate will also rise.
  • If a company's circumstances change and they need to upgrade to a higher level or the allure of the discount prompts them to buy more in the first sale, then you have a higher chance of upselling.
  • Customers will be happier if they have a more positive shopping experience thanks to more personalized pricing and offers, as well as possible discounts.
  • It's easier for your sales team to win, and it's a better match for your specific target audiences if you focus on individual customers.

A business that uses tangible materials as a product, where inventory levels, storage, delivery schedules, and inventory control are all important, can benefit most from using volume pricing.When it comes to reselling excess inventory or selling large quantities of a product, volume pricing can be a real asset.

Final Thoughts

Pricing strategies can be changed at any time, which is a benefit.

It is possible to constantly improve pricing with accounting software that allows you to customize and automate pricing rules easily.

Using this method, you can experiment with different levels, prices, and the number of tiers to see what works best for attracting customers and maximizing your business revenue.

Share: Twitter | Facebook | Linkedin

About The Authors

Keith Peterson

Keith Peterson - I'm an expert IT marketing professional with over 10 years of experience in various Digital Marketing channels such as SEO (search engine optimization), SEM (search engine marketing), SMO (social media optimization), ORM (online reputation management), PPC (Google Adwords, Bing Adwords), Lead Generation, Adwords campaign management, Blogging (Corporate and Personal), and so on. Web development and design are unquestionably another of my passions. In fast-paced, high-pressure environments, I excel as an SEO Executive, SEO Analyst, SR SEO Analyst, team leader, and digital marketing strategist, efficiently managing multiple projects, prioritizing and meeting tight deadlines, analyzing and solving problems.

Recent Articles

  • How To Fix The Samsung Logo Boot Loop (7 Possible Solutions)

    Tech Tips

    How To Fix The Samsung Logo Boot Loop (7 Possible Solutions)

    The Samsung logo screen is often an iconic symbol of reliability and performance, but what happens when a Samsung Galaxy stuck at Samsung logo screen? A frustrating and perplexing problem indeed!

  • Is Broadcasting A Good Career Path?


    Is Broadcasting A Good Career Path?

    Broadcasting, also known as mass communication, involves transmitting information and entertainment content to a large audience through various media platforms, including television, radio, and the internet. It is a dynamic and ever-evolving field that offers exciting opportunities for those looking to pursue a career in it. But is broadcasting a good career path? Let's take a closer look

  • Transformer Response Optimization - Techniques For Improved Performance


    Transformer Response Optimization - Techniques For Improved Performance

    The Transformer model has been widely used for response generation due to its ability to capture long-range dependencies and produce high-quality responses. Transformer response optimization is a technique used to improve the quality of generated responses.

  • Off-Page SEO Hacks - Drive More Traffic To Your Website


    Off-Page SEO Hacks - Drive More Traffic To Your Website

    If you are looking to improve your website's ranking on search engine results pages (SERPs), you need to focus on both on-page and off-page SEO. While on-page SEO includes optimizing your website's content and structure, off-page SEO is about improving your website's authority and credibility on the internet. In this article, we will discuss some off-page SEO hacks that can help you boost your website's ranking.

  • Understanding SEO Poisoning - Protecting Your Online Security


    Understanding SEO Poisoning - Protecting Your Online Security

    Search Engine Optimization (SEO) poisoning is a type of attack that involves manipulating search engine rankings to drive traffic to malicious websites. This tactic is used by cybercriminals to spread malware, steal personal information, and conduct phishing attacks. In this article, we will explore what SEO poisoning is, how it works, and what you can do to protect yourself.

  • Top 12 Proven Ideas To Make Money On TikTok


    Top 12 Proven Ideas To Make Money On TikTok

    Are you ready to turn your TikTok addiction into cold, hard cash? Well, you're in luck because today we're going to be discussing how to make money on TikTok! Yes, you read that right - you can actually get paid for scrolling through your For You Page and creating content that makes people laugh, cry, or dance like crazy.

  • What Is A Zero-Based Budget, And How Do I Utilize One?


    What Is A Zero-Based Budget, And How Do I Utilize One?

    Are you tired of feeling like your money is disappearing into a black hole? Do you find yourself struggling to make ends meet at the end of the month, despite your best efforts? If so, it's time to try a different approach: zero based budgeting!

  • What Do Transportation Jobs Pay?


    What Do Transportation Jobs Pay?

    Transportation jobs are an essential part of the economy, as they ensure that goods and people are moved efficiently from one location to another. Whether you're interested in becoming a truck driver, a pilot, or a railway worker, you may be wondering what do transportation jobs pay. In this article, we'll explore the salaries and job outlooks for some of the most common transportation jobs.

  • SEO Vs Web Developers - What Is Their Difference?


    SEO Vs Web Developers - What Is Their Difference?

    In the world of website development, there are two key players that are essential for the success of any website: SEO vs web developers. While both are important, they often have different goals and objectives, which can sometimes lead to conflict.

  • Entity SEO - Why Every Business Needs To Implement It

  • IPhone Speaker Broken Or Not Working? Let's Fix It With 8 Ways

  • Nintendo Switch Controller Not Connecting? How To Fix It

  • Is Data Entry A Good Career Path?

  • Enterprise SEO Trends - What You Need To Know