Graduated Pricing
What is Graduated Pricing?
Graduated pricing is a model where the cost per unit changes as the customer reaches different usage thresholds. Unlike tiered pricing, where all units are billed at the final tier’s rate, graduated pricing bills each block of usage at its own specific rate.
Why It Matters
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It provides a fair way to bill for high-volume usage by offering discounts on additional units.
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It prevents “cliff” effects where a small increase in usage leads to a massive jump in the total bill.
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It encourages customers to increase their usage by rewarding them with lower marginal costs.
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It allows businesses to capture more value from low-volume users while remaining competitive for large accounts.
