How to Implement Tiered Pricing on Shopify + Apps [2024]

Pricing is one of the most crucial factors in customers’ buying decisions.

Customers want to get the best value for their money — and they have plenty of options in the market. That’s why your pricing strategy requires critical thinking.

You may have created a complex or advanced product or service that can cater to a broad customer base within your niche. But your customers have unique requirements, and obviously, they would want to pay only for what they need. 

That’s where tiered pricing comes into the picture as a solution — and it helps you cater to those unique needs with suitable pricing tiers.

In this blog post, we’ll share different types of tiered pricing models, the benefits of using this pricing strategy, and how to create tiered pricing on Shopify.

What is Tiered Pricing?

Tiered pricing is a pricing strategy where customers are offered different tiers or plans of a product or service at different price points. These tiers or plans could be created based on various elements such as quantity, set of features, usage levels, frequency of delivery, etc.

The tiered pricing strategy has been widely used in the following industries:

• Service businesses
• SaaS (software as a service) brands
• B2B (business-to-business) eCommerce brands

However, it’s also been implemented in certain retail or B2C eCommerce brands in recent years.

Basically, tiered pricing helps customers choose the product or service based on their needs and pay only for what they need or use. For example, why would you pay for a subscription that offers a bundle of personal care products (shampoo, body wash, and serum) if you only need a body wash subscription?

From the brands’ perspective, the tiered pricing strategy helps increase the conversion rate and build a loyal customer base. For example, If your complete package is worth $150, it may sound like a big amount to some customers. But if you launch a starter pack of $45 (along with $90 & $150 tiers), you can attract customers to give it a try.

Types of Tiered Pricing Models

Depending on your product or service type, you can implement a suitable tiered pricing model. Here are some of the most commonly used tiered pricing models:

1. Quantity-based tiered pricing:

This tiered pricing model is used by retail and B2B eCommerce brands.

Quntity-based tiered pricing offers customers different tiers of quantities at different price points. As customers go for the higher tier with higher quantities, the price per unit reduces accordingly.

The main purpose of this pricing model is to entice customers to purchase a higher quantity of your product. Here’s an example:

Pricing tier	Number of units	Price per unit
Tier 1	Buy 10 units	$25
Tier 2	Buy 20 units	$23
Tier 3	Buy 30 units	$20

2. Feature-based tiered pricing:

This is one of the most common tiered pricing models in SaaS brands. In this model, customers are offered different pricing tiers or plans based on the set of features included in each plan. 

Starting from a basic plan that includes a few features and going up to higher pricing plans that cover more distinct and premium features. This model could be quite suitable when your product has multiple features.

By the way, we don’t need to go and search for an example for this one. GemPages’ pricing model is a great example of feature-based tiered pricing.

3. Subscription-based tiered pricing:

Subscription-based businesses have a great opportunity to create tiered pricing plans based on the frequency as well as features. The subscription model has been traditionally popular with tech and SaaS brands; however, many retail eCommerce brands have also adopted this business model in recent times.

For example, let’s say you’re a coffee brand. You can create three different plans based on a certain quantity to be delivered weekly, bi-weekly, or monthly.

4. Usage-based tiered pricing:

The usage-based pricing model is usually implemented by SaaS or other tech companies. For example, an internet service provider may charge based on the units of data used by the customer.

According to OpenView, 61% of SaaS companies have adopted usage-based pricing, and 21% are expected to test it. This shows the popularity this pricing model has been gaining in recent years.

5. Quality-based tiered pricing:

Most brands may not create different tiers of quality. After all, everyone wants to claim the best quality in the market. However, there are certain products or services where quality-based pricing could be applicable.

Let’s take the same example of an internet service provider. An internet service may have different speed plans, e.g., 50 MBPS, 100 MBPS, and 200 MBPS. Thus, the internet speed can be considered a quality criterion in this example.

6. User-count-based tiered pricing:

Again, this tiered pricing model is typically used by SaaS or other tech companies. In this model, customers are offered different pricing plans based on the number of users that are going to use the product/software.

For example, Microsoft 365 has two different plans: 1. Microsoft 365 Family for one to six people and 2. Microsoft 365 Personal for one person.

7. Hybrid/custom tiered pricing:

There could also be a combination of two or more tiered pricing models. For example, the tiered pricing plans could be based on features as well as usage levels.

Also, some brands offer a custom pricing plan (along with the fixed ones) where customers can customize their package and the pricing based on their requirements.

Quantity-Based Tiered Pricing vs Volume Pricing

The “quantity-based tiered pricing” model is often confused with the “volume pricing” model. But there’s a subtle difference between both of the pricing models.

Let’s understand this difference with the help of the below example:

A customer wants to purchase 90 units of water bottles. So, let’s see how the pricing may work with both of these models:

Pricing Calculations for 90 Units of a Product
Quantity-Based Tiered Pricing
Pricing Tier - 1	01-30 x $10 per unit	= $300 for the first 30 units
Pricing Tier - 2	31-60 x $9 per unit	= $270 for the next 30 units
Pricing Tier - 3	61-90 x $7 per unit	= $210 for the next 30 units
	Total price of 90 units = $300 + $270 + $210 = $780
Volume Pricing
Purchase Volume - 1	For up to 30 units, $10 per unit	Not applicable (as the customer requires 90 units that fall under the third tier).
Purchase Volume - 2	For up to 60 units, $9 per unit
Purchase Volume - 3	For up to 30 units, $7 per unit	Total price of 90 units = $630

As you can see in the above example, quantity-based tiered pricing would cost more ($780) to the customer as compared to volume pricing ($630). Thus, logically, the former might not attract buyers.

That said, the main goal for both of these pricing models is to entice customers to purchase in bulk quantity to increase the average order value.

Benefits of Offering a Tiered Pricing

The goals behind implementing tiered pricing could be different for different businesses, and thus, it can offer various benefits depending on the goals and the specific model:

• Increase conversions:

Tiered pricing plans offer an easy entry point to customers as brands would typically go for the low-priced starter plan. Customers can easily afford to purchase the product or service with the starter plan and use the product/service for a while before going for a larger purchase.

• Offer flexibility:

As mentioned before, customers may have unique requirements for the product or service. Tiered pricing plans let the customer decide what level of service, quantity, quality, or frequency they require and pay for it accordingly.

• Enhance customer lifetime value:

After getting the customers to buy your initial or starter offer, you can entice them to update the tier to higher levels with time. In the long run, this can increase your customer lifetime value as they start purchasing more expensive tiers.

• Increase customer satisfaction:

When customers get flexibility in the pricing options, it not only helps them with affordability but also enhances their satisfaction. They feel seen and heard when they get to choose their preferred package or plan.

How to Create Tiered Pricing on Shopify

Shopify App Store offers plenty of different options in terms of Shopify apps that can help you create tiered pricing plans on your Shopify store.

Step 1: Define Your Pricing Tier Model

First things first, what specific pricing tier model would you like to adopt?

To decide this, you need to look into your product or service specifications as well as research customers. You can analyze the historical data and conduct surveys to gather details on customer behavior and feedback.

Consider the profit margins and finalize a pricing tier model.

Step 2: Research and Finalize Your Tiered Pricing App

Go to the Shopify App Store and search for the keywords — “tiered pricing” and “pricing tables”. Depending on your requirements, choose the app. 

When you search for “tiered pricing” apps, you’ll find apps that can help you create tiered pricing with quantity breaks (aka volume discounts). On the other hand, when searching “pricing tables”, you’ll find apps that can help you create pricing tiers along with the list of features.

Step 3: Install the App & Configure the Settings

For this guide, we’ll go with the “POWR: Pricing Table Comparison” app. Click on the Install button to proceed with the installation.

Review the access permission and click the Install button.

As soon as the app is installed, you’ll see a welcome popup with some basic instructions.

Step 4: Create Your Pricing Tiers

Now, you’re all set to create your pricing tiers based on your requirements. 

You can insert/edit the names of the pricing tiers and list all the features under each pricing tier. Customize the colors, size, borders, etc. to match your branding.

Once everything’s done, hit the Publish button to make the pricing tiers live on your store.

Step 5: Test and Review the Changes

Whenever you install any new app or make any changes to your store, you must test and review to see if the changes are implemented correctly.

You can also place a test order to see if everything’s working as expected.

Best Tiered Pricing Apps for Shopify

1. Rapi Bundle Quantity Breaks

Rapi is a four-in-one bundle app that can help you create tiered pricing as well as “quality breaks” ( aka volume discounts). The app has earned a “Built for Shopify” badge which indicates the app has cleared Shopify’s quality standards for speed, ease of use, and merchant value.

Ratings & Reviews: 5.0 Out of 5 Stars (959 Reviews)

As you can see in the below example, the customers are offered different pricing options based on the quantity: Single, Duo, or Trio packs.

Key Features of Rapi:

• Quantity breaks: Offer customers different pricing options with volume discounts.
• Promotional offers: Create bundle offers, upsells, cross-sells, coupons, and BOGO (Buy One, Get One) offers.
• Full customization: Customize the design with different elements such as block size, colors, fonts, background, etc.
• Popular products: Display your best-selling or popular products together with BOGO and upsells.

Pricing:

The app is completely free.

2. Volume Discounts — Dealeasy

Dealeasy is another app that helps you create tiered pricing and volume discounts or quantity breaks. The app ensures it does not break your checkout through draft orders. This app also has the “Built for Shopify” badge.

Ratings & Reviews: 4.9 Out of 5 Stars (261 Reviews)

Key Features of Dealeasy:

• Volume discounts: Lets you create volume discount offers using the native discounts.
• Tiered pricing: Present the tiered pricing options and quantity breaks easily on your product pages.
• Cart promotions: Configure a free shipping bar or free gift promotions on the cart progress bar.
• Automatic tiers: Helps you create up to five different automatic discount tiers.

Pricing:

The app offers a 30-day free trial and then it’s free to use for up to 50 orders per month. As your business scales, you’ll need to purchase a paid plan.

3. OC Quantity Breaks Order Limit

OC Quantity Breaks Order Limit is a Shopify app that can help you create automatic discount offers such as tiered pricing and advanced discounts.

Ratings & Reviews: 4.8 Out of 5 Stars (474 Reviews)

Key Features of OC Quantity Breaks Order Limit:

• Tiered discounts: Lets you create quantity breaks along with bundle discount offers.
• Logic-based discounts: Create tiered discount offers with a cap for the maximum discount amount and show the offers to tagged customers only.
• Promotional offers: Display cart upsell offers, discount labels, as well as automatic discount offers.

Pricing:

4. POWR: Pricing Table Comparison

If you’re looking to implement feature-based pricing tiers, this app can be quite helpful. POWR: Pricing Table Comparison is a Shopify app that can help you display pricing tables along with the list of features included in each plan.

Ratings & Reviews: 4.8 Out of 5 Stars (48 Reviews)

Key Features of POWR:

• Highlighted plan: Display the pricing plans with the "Best" or "Recommended" badge to draw your customers' attention.
• CTA buttons: Create call-to-action (CTA) buttons for one-time payments, and donations, and offer subscription pricing too.
• Payment options: Direct customers to your pricing page or let them make a direct in-app payment.
• Customizations: Customize the pricing tables with size, colors, and borders to match with your branding.

Pricing:

Final Thoughts on Tiered Pricing Strategy

Just like any other eCommerce strategy, your pricing strategy must also be fueled with customer feedback. After all, they’re the best source of information for any improvement that may be required.

In the backend, you can monitor and analyze your data to find observations on customer behavior and patterns. You can also test or experiment with any needed changes from time to time.

For eCommerce marketing strategies and best practices, check out more resources on our Blog — and join the GemPages Facebook community to network and learn from like-minded entrepreneurs and experts.

FAQs about Tiered Pricing on Shopify