![]() This will give your customers benefits that will save money for them and as well as bring in a lot of revenue for your business. Standard Tier: The standard model is usually a combination of the basic features along with some advanced features. This model will basically allow your customers to start using your product and solve the problem they face. Tier Pricing Structure (Popular Three-Tier Strategy):īasic Tier: The basic model will provide your customers with the essential features at affordable pricing. Let’s look at how you can structure your pricing model based on tiers. The number of tiers should allow you to capture the market by targeting different market segments without losing out on revenue. Your value metric with which you set your prices can be either quantitative, usage, feature sets or based on how your customers perceive the product. ![]() You will have to be careful about deciding the value metric and the cost for the respective tiers. The main idea behind a tiered pricing strategy is that your prices and features should be tailored according to the various needs and use cases of the customers you’re selling to. Many companies in the SaaS space most commonly have three tiers to differentiate the price points and some, even more. Tiered Pricing / Price Tiering as a Strategy: ![]() Whereas, in a volume pricing model, the total is calculated as ($5圆0) according to the total number of widgets bought which falls under the 30-100 widgets price range. You move to the next tier only when one tier is completely filled. In a tiered pricing model, you calculate your total like this: How do you calculate pricing for the Tiered model? Here is how your prices would vary if you either opt for a tiered pricing model or a volume pricing model. ![]() Suppose you’re a business who is selling widgets. Still difficult? Let’s understand the difference using a simple example. Volume Pricing: The price of all the units you’re selling is within the set price range. Once you fill up one tier you move to the next. Tiered model: The price per unit you’re selling is within a particular price range. ![]()
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