Tiered pricing is a type of usage-based metered pricing where different ranges of consumption correspond to different flat fee or per unit charges. These different ranges are tiers.
What is Tiered Pricing?
Tiered pricing is a popular model that can be used to price subscription-based products and services, particularly SaaS products, where each tier corresponds to its own flat fee or per unit price.
To create tiered plans where each tier offers different features and corresponds to a set price, create separate flat fee plans using this guide.
Inside SubscriptionFlow, tiered pricing is tied to usage based charge types. You can set a flat fee or a per unit fee that corresponds to different tiers.
Tiered Pricing with Flat Fee Charges
Let’s consider a mobile service provider that offers tiered usage plans for internet access.
The first tier covers usage from 1-5 GB with a fixed cost of USD 3.99.
The second tier lets you use up to 10 GBs and costs USD 9.99.
You can have as many tiers as you wish in your tiered pricing strategy.
Tiered Pricing with Per Unit Charges
Let’s consider the example of an electricity distribution company. Let’s say it charges electricity consumption in kWh units in the following scheme:
0 - 100 kWh : USD 5 (per unit)
101 – 200 kWh : USD 20 (per unit)
201 – 300 kWh : USD 50 (per unit)
301 – 500 kWh : USD 75 (per unit)
501 - 800 kWh : USD 90 (per unit)
801+ kWh : + USD 100 (per unit)
Typically the price per unit increases with the rise in usage as you move up the tiers. This helps merchants make more revenue from high volume accounts while limiting usage. In this example, each tier reflects a range of units consumed and corresponds to its own per unit price.
How to Set up Tiered Pricing inside SubscritpionFlow
1. From your dashboard go to Products and click on ‘Create Product’.
2. Name the product and plan.
3. Choose your charge type i.e. usage charge in this case.
4. Select Tiered Pricing.
5. Select billing frequency. In this case we choose monthly billing.
6. Next, design your tiers. Select a usage range and assign it a flat fee or per unit charge. Here lets say the first 10 articles they read go for a flat fee of USD 20.
7. Add as many tiers as you want. In the second tier any article over the 10 goes for a flat fee of USD 30 posing no limits on how many articles you can read. Click taxable if you wish to select any preconfigured taxes. Learn how to manage taxes in this guide. Then save your pricing configuration.
8. A green pop-up notification will appear at the top right-hand corner of the screen, indicating that the pricing plan has been saved successfully.
14. You will be redirected to the detailed product view where you can see the newly created plan with tiered usage with overage pricing. Usage based pricing is usually corresponds to post-billing based on units consumed.
And that is how you set up tiered pricing inside SubscriptionFlow
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