What is Tiered Pricing? Types and Strategies for 2025

Tiered pricing is a common model for all sorts of companies, especially subscription and service-based businesses. Let’s say you run a yoga app and notice that some customers want a list of basic videos they can follow along with at home, while others are looking for personalized coaching based on their goals, weekly analytics, and a community platform. Offering a one-size-fits-all product can leave the former group overwhelmed by expensive, unnecessary services or the latter dissatisfied with a lack of options. Tiered pricing presents a solution in a competitive landscape where customers expect solutions tailored to their needs and budgets. 

By introducing multiple pricing levels based on factors like product features, order size, or customer type, merchants can make their products appealing to customers with a range of needs. In fact, a 2024 study of park-and-ride facilities near subway stations found that switching from flat to tiered pricing increased high-value user participation by 13% and boosted average revenue per vehicle by 385%. Pricing structure alone can shape customer behavior and dramatically improve business outcomes.

In this guide, you’ll learn what tiered pricing is, why it works, and how to implement it effectively. It’s not a plug-and-play solution, but when done right, it can turn pricing into a lever for growth—especially in unpredictable conditions.

What is tiered pricing?

Tiered pricing is a strategy that sets different price rates based on service levels or quantity purchased. It incentivizes higher-value purchases while offering accessible options for customers looking for basic features. Originally popularized in industries like sports and entertainment, tiered pricing has evolved into a flexible strategy that small ecommerce businesses now use to boost revenue and influence buying behavior. 

According to a 2024 study on maximizing sports revenue, the effectiveness of tiered pricing lies partly in how it taps into powerful psychological principles that influence buying decisions:

• Price-quality perception: Customers often associate higher prices with higher quality, making premium tiers more attractive.
• Loss aversion: Customers are more motivated to avoid missing out on value or savings than they are by gaining extra features. Tiered pricing triggers this by showing multiple options side by side, making the trade-offs clear.

Tiered pricing vs. volume pricing: What’s the difference?

When it comes to incentivizing users to purchase products in large quantities, tiered pricing and volume pricing are similar strategies. In this context, tiered pricing means breaking product quantities into tiers, with each higher tier commanding a lower per-unit price: For example, offering 10 products for $10 each, additional products up to 20 for $8 each, and additional products beyond 20 for $6 each. In this case, buying 30 products would cost $240.

Volume pricing applies a single lower rate to the entire order once higher quantity thresholds are met. For example, offering 10 products for $10 each, 20 products for $8 each, or 30 products for $6 each. In this case, buying 30 products would cost $180.

Let’s look at each in more detail. 

Tiered pricing

There are different types of tiered pricing: Customers may pay more for a subscription with more features, or pay a set price per unit within each tier, with prices typically decreasing as tiers increase. This incentivizes customers to purchase more to reach better price points, while still accommodating smaller purchases at higher per-unit costs.

For example, sustainable packaging brand Better Packaging Co. presents its tiered pricing as a “Spend & Save” discount model.

As customers increase their order size—from 20-pack starter bundles to high-volume retail orders—their effective cost per mailer drops at clear thresholds. Once an order reaches 10,000 units, Better Packaging Co. shifts to a custom quote pricing system, with rates starting at 5¢ per mailer.

Volume pricing

The volume pricing system simplifies things for both customers and businesses. Buyers know exactly what they’ll pay per unit as they scale, keeping budgets predictable. On the business side, operations become more streamlined, simplifying invoicing, inventory planning, and order management.

The trade-off? Although volume pricing encourages larger purchases, it can result in lower revenue than a tiered model since the rates “unlocked” by larger purchase amounts apply to the entire order. That said, this trade-off may not matter as much in wholesale scenarios where large buyers value straightforward product costs and a flat rate often offers the clarity and consistency they’re looking for.

Tiered pricing models

Whether you’re selling artisanal soaps to boutique hotels or offering specialty chocolate subscriptions to cocoa enthusiasts, you can probably experiment with pricing your product according to tiers. 

But not every company applies this strategy in the same way. Your ideal approach depends on your product, market, and business goals.

Here are four different types of tiered pricing models to explore (plus, a few tiered pricing examples for your consideration): 

Feature-based tiered pricing model

Feature-based pricing is a value-based tiered pricing model that categorizes products or services into different tiers, each with distinct features at varying price points. 

It caters to various customer needs and budgets, like a customer relationship management (CRM) tool offering basic, pro, and enterprise levels, or a refrigerator line with basic, premium, and luxury versions.

Photo Booth Supply Co. uses tiered pricing to match the needs of growing photo booth businesses. Its Salsa Booth is available in three packages—Starter, Essentials, and Growth—each offering progressively more value. 

For an additional $53 per month, the Essentials package builds on the Starter by including an Atlas backdrop, stand, a full year of Fiesta Pro software, and a professional-quality marketing video featuring the buyer’s branding. 

The Growth package is designed for scaling businesses, bundling two Essentials packages together at a discounted rate. This structure shows how tiered pricing can create clear upgrade paths, encouraging customers to invest more as their businesses expand.

Subscription-based tiered pricing model

Subscription-based pricing offers different service levels or product quantities at recurring intervals (e.g., monthly or quarterly). 

This approach lets you segment customers based on their needs or desired features, with higher tiers often providing better value or additional perks.

For businesses, subscription-based pricing offers more predictable, recurring revenue streams, even at lower price points, contributing to financial stability and improved resource planning, like hiring for customer service or executing a brand extension.

Sticker brand Pipsticks uses subscription-based tiered pricing to serve different customer interests, offering monthly clubs for kids, adults, and stationery lovers. 

In the Kids and Pro Sticker Clubs, customers can choose between a Classic subscription ($19.95) or a Petite option ($13.95), while the Stationery Club ($69.95) and Ultimate Pips Kit ($109.85) bundle even more products. By segmenting products and offering pricing tiers, Pipsticks serves customers with different interests and builds predictable, recurring revenue that supports growth.

Usage-based tiered pricing model

Usage-based or pay-as-you-go pricing charges customers based on their product or service consumption. If you’re selling a cloud-based service, this might mean paying for storage by the gigabyte. If you’re a retailer, it might be based on items purchased or service frequency.

This model is popular because it aligns costs with usage, offering fairness and flexibility that can still incentivize increased consumption as customers see value in each additional unit.

For example, Black & White Coffee Roasters uses Bottomless to offer a usage-based subscription that keeps customers stocked with fresh coffee. 

Smart measuring scales track users’ coffee consumption and trigger automatic reorders based on real-time usage, giving subscribers peace of mind that coffee shipments match their needs.

Dynamic tiered pricing model

With dynamic pricing tiers, businesses can adjust their rates based on real-time conditions like market demand, inventory levels, customer behavior, and other external factors, while still preserving the benefits of structured tiered pricing. 

For example, a merchant might set volume-based tiers for wholesale buyers but raise prices slightly during periods of high demand or drop them during slower seasons.

This strategy helps you stay competitive while maximizing revenue, without losing the incentives that tiered pricing offers. It’s especially powerful for businesses with fluctuating costs, strong seasonality, or diverse customer segments.

While dynamic pricing once required teams to manage this manually, AI pricing optimization and dynamic pricing algorithms have made it much easier for smaller businesses to adopt. 

Shopify merchants can use apps like Aument and Spresso.ai to monitor key data points and automatically adjust prices within preset tiers. These tools power personalized pricing strategies that respond in real time to shifts in supply, demand, or customer data, allowing merchants to fine-tune pricing tiers based on context, not guesswork.

Tiered pricing best practices

Implementing a tiered pricing model can boost revenue and attract customers. But when poorly executed, you might find customers gravitating toward one particular tier or leaving for competitors when they reach certain thresholds. 

To avoid these pitfalls, consider the following best practices for adopting a tiered pricing structure:

Create buyer personas

Before setting up pricing tiers, understand the distinct types of customers you’re serving. What are their goals? Budgets? Technical needs? 

Knowing your buyers supports customer segmentation pricing, allowing you to match each tier to a clearly defined group with unique needs and buying behaviors.

Shopify’s pricing structure is a great example of this in action:

• Basic: Built for solo entrepreneurs, with essential ecommerce tools, localized selling in three markets, and standard processing rates.
• Grow: For small teams, with added staff accounts, shipping insurance, and reduced card rates.
• Advanced: Designed for scaling businesses that need advanced reporting, more staff access, and real-time shipping rate calculations.
• Plus: Tailored to high-volume merchants with complex needs—unlimited staff accounts, priority support, and B2B features like wholesale pricing.

As merchants grow, they unlock more sophisticated tools and better pricing terms. It’s a pricing model built around business maturity, not just feature access—making Shopify’s tiers a standout example of how clear buyer personas can shape pricing strategy. 

Communicate unique values

Tiered pricing offers choice, but you need to guide customers toward the right option for them, so providing clear information is essential. 

For example, for feature-based pricing, you can make a comparison chart highlighting the unique benefits of each tier, focusing on the added value as customers move up. With subscription-based models, it may help to explain the long-term savings or exclusive perks that come with higher tiers or longer commitments. For usage-based pricing, provide calculators or case studies that prove cost-effectiveness as usage increases.

These pricing strategies inform customers but also demonstrate the value proposition of each tier, encouraging upgrades and maximizing customer satisfaction and revenue.

Limit pricing tiers

According to a 2024 study, excessive pricing choices can create decision fatigue, lower conversions, and increase the risk of cart abandonment. This causes choice overload, in which too many options overwhelm potential customers, leading to inaction.

For ecommerce businesses, three distinct pricing tiers remain the sweet spot. This “rule of three”—a basic, mid-tier, and premium option—simplifies decision-making while covering a broad range of customer needs and price sensitivities. It also creates a natural upsell path: as customers move from one tier to the next, they see clearly defined value at each step.

The mid-tier itself can do more than serve as a compromise. A 2025 study on decoy pricing found that introducing a carefully structured “decoy” option—typically a slightly less attractive version priced close to the premium offering—can boost sales of the top-tier product by up to 30%. 

This works by altering perceived value, making the premium tier appear like a smarter, more economical choice for just a small price jump.

Optimize with data analytics

Your pricing tiers shouldn’t run on guesswork. The best way to refine your model is by tuning in to how your customers actually behave. What are they clicking on? Where do they drop off? Which tier converts well—but doesn’t deliver enough profit?

Dive into metrics like average order value (AOV), customer lifetime value (CLV), and churn rates to spot opportunities. Maybe your mid-tier is popular but underpriced. Or perhaps your premium plan gets views but few sign-ups—hinting that it needs either more perceived value or a clearer pitch.

Shopify’s built-in analytics can surface these insights fast. Track performance across customer segments, spot patterns over time, and use that data to adjust pricing, bundle smarter, or highlight features that drive real impact.

Your tiers are more than numbers—they’re how your customers experience your brand. Let the data tell you where they’re converting (and where they’re walking away).

Ensure price transparency

Price transparency in tiered models builds trust and reduces friction—especially when customers are comparing multiple options. When shoppers understand what they’re paying for (and why), they’re more likely to feel confident in their choice, upgrade tiers, and stick with your brand long-term.

In usage-based or feature-based pricing, clearly outline what’s included at each level. Avoid vague language or hidden fees that can erode trust. Include real-world examples, cost calculators, or comparison tables to show how value increases across tiers.

Implementing a tiered pricing strategy in 2025

Tiered pricing remains one of the most effective ways to balance value and affordability—but expectations around how you execute it are evolving. In 2025, ecommerce shoppers expect clear, customizable pricing options that feel tailored to their needs—not arbitrary price walls or feature gates.

Fortunately, tools available in the Shopify ecosystem make it easier than ever to build, manage, and optimize dynamic pricing tiers. Whether you’re using apps to automate customer segmentation or testing pricing psychology in real time, today’s strategies can be both smart and ethical. Below, we’ll explore key platforms that support tiered pricing and how to test your tiers to maximize performance.

Tools and platforms for tiered pricing

For Shopify users, a variety of apps and tools support effective tiered pricing:

Bold Custom Pricing

Ideal for B2B sellers and membership-based pricing, Bold Custom Pricing lets you create unlimited pricing tiers and quantity breaks. You can assign specific price levels to different customer groups and offer discounts that increase with order volume.

Tiers can be applied to individual products or collections, and pricing can be set as fixed amounts or percentages. This structure makes it easy to reward bigger purchases and control how each customer group sees pricing across your store.

Hulk Discounts VolumeBoost

Ideal for merchants offering quantity-based tiered pricing, the Hulk Discounts VolumeBoost app lets you create bulk discount structures that adjust pricing based on how much a customer adds to their cart. You can set clear pricing breaks (e.g., buy 5+, get 10% off) and match them to specific customer tags or regions.

It’s a straightforward way to encourage larger orders, support wholesale logic, and customize tiered offers without complex workarounds.

Intelis AI

Ideal for merchants who want to automate and optimize dynamic tiered pricing, Intelis AI uses real-time data to adjust pricing based on market demand, competitor changes, and shopper behavior. It can raise or lower prices within preset tiers, ensuring you stay competitive without sacrificing margins.

With integrations across platforms like Google Shopping, Amazon, and eBay, Intelis helps Shopify merchants keep tiered pricing agile and responsive, perfect for stores with fluctuating inventory, seasonal demand, or fast-moving product lines.

Testing and optimizing your tiers

Don’t set and forget your tiered pricing. Running A/B tests will help you determine what format of tiered pricing and configurations—like price points, feature bundles, and tier names— resonate most with customers. 

Use Shopify’s A/B testing apps to compare conversion rates between pricing versions.

Regularly solicit feedback through post-purchase surveys or customer interviews to uncover hidden friction or opportunities and adjust your tiers based on real data, not assumptions.