Tiered Pricing

Tiered pricing offers multiple price points for a product with varying levels of functionality or service.

It is the most often used pricing model.

The advantage of tiered pricing is as follows:

It gives the user multiple options to choose from.  

The better the fit to the customer’s budget the more likely the customer will sign up and retain.

Captures more revenue from the customer because it fits their business better.

This decreases the number of customers who would pay more for the product.

Provides a growth path for users.

Customers can upgrade as their need for the service grows.

The drawbacks to tiered pricing are as follows:

Too many choices will confuse the customer.

Too broad of an offering may lack focus.

Most tiered pricing solutions offer three choices.

 

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