# Tiered Pricing

> Tiered pricing is a model where the price per unit changes as the customer moves into different usage brackets.

- **URL**: https://dodopayments.com/glossary/tiered-pricing

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## What is Tiered Pricing?

Tiered pricing is a model where the price per unit changes as the customer moves into different usage brackets. In this model, once a threshold is reached, all units consumed during that period are typically billed at the rate of the highest tier reached.

### Why It Matters

- It incentivizes higher usage by offering lower unit costs at higher volumes.

- It allows businesses to segment their market and offer different price points for different customer sizes.

- It is a powerful tool for driving expansion revenue as customers naturally grow into higher tiers.

- It provides a clear path for small customers to start with the product and scale over time.

## Learn More

- [Tiered pricing model guide](https://dodopayments.com/blogs/tiered-pricing-model-guide)
- [Pricing psychology tactics that improve conversion](https://dodopayments.com/blogs/pricing-psychology)
- [How to use value-based pricing in SaaS](https://dodopayments.com/blogs/value-based-pricing-saas)