Tiered Pricing

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.