Tiered, volume pricing is the type of pricing structure where the price per unit changes (typically decreases) as the quantity of units purchased increases. This type of pricing is most commonly used when businesses are selling usage-based products where increased usage of the product decreases the per unit price.
Businesses often choose to use a tiered, volume pricing structure to encourage customers to purchase larger quantities by offering a lower price per unit to customers who purchase larger quantities. This strategy can help increase customer loyalty and encourage customers to purchase more of the product in the future.
Setting up tiered, volume pricing
To setup a SKU with tiered volume pricing, we'll first create a SKU and select either "Month", "Year", or "One-time" as the pricing model. This determines whether the per unit price of the product is recurring on a monthly or annual basis, or sold as a one time fee.
We'll then enter the per unit price of the first tier.
Next, we'll set up the tiers of pricing, by going to the "Tiered Pricing" tab and clicking on "Setup tiered, volume pricing".
Here, we can enter the minimum and maximum quantity for each tier, and the price of each tier, per month basis. (If we wanted the rate to be per annual basis, we would change the unit pricing schedule to "Year".) The max in the last tier must be left blank to represent infinity, so that there's always a price regardless of how much is sold.
In this example, if we sell 400 units, each unit sold would be priced at $48 per month.
Lastly, we'll go to the "Pricing" tab and add a brief product description, then click save! Now we're ready to start using this SKU on our deals.
Quoting with tiered, volume pricing
When quoting, we'll go ahead and click on the "Add SKU" button to select the SKU. The "Add SKU" button will create a pricing table with our SKU as a line item. To learn more about how to adjust the display of this table, take a look at this article.
Now, when we update the quantities purchased by our customer and we can see that price per unit adjusted to a different tier.