Benefits of Tiered Pricing in WooCommerce | The Easiest Way to Get More Sales

tiered-pricing-blogs-new_Benefits of Tiered Pricing in WooCommerce- The Easiest Way to Get More Sales-33

Are you looking for an easy way to increase your WooCommerce sales? If yes, opting for a tiered pricing strategy would be your best bet.

In eCommerce, tiered pricing is a powerful pricing strategy that drives sales and boosts profits. Many wholesalers prefer volume pricing, but there are far greater benefits to using a tiered pricing approach.

In this article, we’ll explain tiered pricing, how it works, and the benefits of using a tiered pricing strategy on your WooCommerce store.

So, without further ado, let’s dive in.

WooCommerce Tiered Pricing: What is it, and How Does it Work?

WooCommerce Tiered Pricing is a pricing strategy that you use to offer different prices or discounts based on specific criteria (i.e., product quantity, number of subscriptions, etc.) and offer a unique price or discount as customers qualify for each tier. Using this approach, you can cater to various customer segments based on their buying behaviors and needs, which can help you increase sales and customer satisfaction.

Still not clear? Worry not! Let’s look at how it works with a couple of examples.

Examples of Tiered Pricing

Following are examples of how you can implement a tiered pricing model in your WooCommerce store:

Examples#1: Subscription Service

Software Subscriptions:

  • 1 User @ $10 per month
  • 5 Users @ $40 per month
  • 10 Users @ $70 per month

Data Packages:

  • 5GB @ $50 per month
  • 8GB for $60 per month
  • 12GB for $90 per month

Examples#2: Discount Offerings

You can offer higher discounts based on the quantity or number of units a customer purchases.

  • For 1-25 units, you get 10% OFF
  • For 26-50, you’ll get 15% OFF
  • For 51-75, you’ll get 20% OFF
  • For 76 and above units, you will receive 25% OFF

Examples#3: Wholesale Bulk Orders

If you’re running a wholesale business, then considering a tiered pricing strategy would be more beneficial than volume pricing.

Let’s understand it with a quick example:

You’re selling an XYZ product. Here are the prices you would charge your customer based on the different pricing models: tiered and volume.

Tiered PricingVolume Pricing
0-20 XYZ Product = $250-20 XYZ Product = $25
20-40 XYZ Product = 15$20-40 XYZ Product = 15$
40-100 XYZ Product = 10$40-100 XYZ Product = 10$

Now, calculate the total spending if a customer purchases 70 units of XYZ products.

Total Spending According to Tiered Pricing Model:

[($25×20) + ($15×40) + ($10 x 10)] = $1200 (Total Spending)

Total Spending According to Volume Pricing Model:

($10 x 70) = $700 (Total Spending)

You have just seen that a tiered pricing model can lead to higher profits and sales than volume pricing. Because, in a tiered pricing model, you can only move to the next tier when the previous one has reached its capacity. In contrast, in volume pricing, you charge one flat price for the whole quantity based on a specific tire.

What are the Benefits of Tiered Pricing in WooCommerce?

To fully understand the benefits of WooCommerce tiered pricing in your business, let’s dive into the tiered pricing benefits in detail so you can determine if it’s the right approach for boosting your sales and increasing your profits.

You can benefit from tiered pricing in WooCommerce in many ways, such as:

  • Boost Your AOV (Average Order Value)
  • Greater Customer Loyalty
  • Higher Conversion Rate
  • Faster Inventory Turnover
  • Better Customer Experience With More Options

• Boost Your AOV (Average Order Value)

Yes, that is correct! Offering tiered pricing can entice your customers to spend more to get higher discounts.

Let’s examine it with an example of how tiered prices can help boost your Average Order Value (AOV).

Let’s say your WooCommerce store generates total revenue of $3000 from 250 orders; your average order value would be $12 per order. But what if you incentivize customers to purchase more by offering discounts for larger quantities? For instance, if you sell two products for $18 as a bundle instead of $12 if bought separately, you effectively earn an extra $6 from each sale. This can potentially increase your average order value by 33.33%.

That’s really cool, isn’t it? Tiered pricing gives you an easy way to increase your Average Order Value (AOV) by encouraging customers to purchase more so they can receive a higher discount.

It’s a win-win for both!

NOTE: With a plugin such as Tiered Pricing for WooCommerce, you can easily implement tiered pricing into your WooCommerce store. It calculates everything for you and shows a single price that includes the discount, making the whole process seamless.

• Greater Customer Loyalty

One of the best things for a business is to have loyal customers. When customers are happy with the products and services, they are more likely to recommend them to their friends and family.

So, how can tiered pricing help build customer loyalty?

With tiered pricing, offering the right value and price for each tier is important. Highlight the key features of your products so customers can clearly understand what they’re paying for and feel confident that they are receiving the best value for their money.

In other words, you should make sure your customers understand the benefits they’re getting for their money, which will help increase the likelihood of future purchases and establish customer loyalty.

• Higher Conversion Rate

With tiered pricing, you have the potential to attract a large audience. Adding a discount to your product or advertising a special offer can encourage customers to visit your store website, which can ultimately lead to a higher conversion rate.

Most people often take advantage of deals, especially when there is a great discount, and make impulsive purchases.

So, you can easily increase your conversion rate by offering tiered pricing on your WooCommerce store.

• Faster Inventory Turnover

Tiered pricing can play a big role in speeding up your inventory turnover, which is the number of times your inventory is sold and replaced within a certain time period. When your inventory moves faster, it helps you save on storage costs and other expenses associated with keeping unsold products on hand.

A slow inventory turnover can be a problem because the longer your products sit in the warehouse, the more money you spend on storage and other related costs. But with tiered pricing, you can encourage customers to buy more and move your inventory more quickly.

To put it simply, the formula for inventory turnover is:

Inventory Turnover = Cost of Goods Sold / Average Inventory Value

By optimizing your pricing strategy with tiered pricing, you can considerably reduce the average value of your inventory, which ultimately increases your inventory turnover. And that’s a win-win for your business, as it means you can make the most of your resources and keep your costs under control.

• Better Customer Experience With More Options

Most customers appreciate having multiple options, and tiered pricing offers them just that.

When you allow your customers to purchase multiple items at once, you give them more choices and the opportunity to bundle complementary products.

For example, you might offer matching shirts with matching pants and shoes in a bundle at slightly lower prices. Consequently, it gives your customer a better deal and increases your sales simultaneously.

Wrapping Up

Many businesses implement tiered pricing to offer customers a flexible and convenient way to purchase goods and services. If you offer a variety of products or services, then this pricing strategy could be the right choice for your WooCommerce business.

With a better understanding of the benefits of tiered pricing in WooCommerce, you can now consider implementing this strategy to improve your sales.

If so, then to get started, you can use a plugin such as Tiered Pricing for WooCommerce, which makes it simple and easy to implement tiered pricing on your WooCommerce store.

Frequently Asked Questions

Q1. What is the difference between tiered pricing and volume pricing?


Tiered and volume pricing are similar because they offer discounts for purchasing more of the same item. However, tiered pricing typically offers different discounts for different quantities of a product, while volume pricing typically offers a fixed discount for a certain quantity of a product.

Q2. What is eCommerce tiered pricing?

Tiered pricing is a pricing strategy in eCommerce where a seller offers different prices for different quantities of a product, typically encouraging customers to purchase more at lower prices.

Q3. What is an example of a tiered pricing method?

An example of tiered pricing is offering a lower price per unit when a customer buys more of a product, such as 10% off when they purchase 2 items, 20% off when they purchase 4 items, and so on.

Q4. What is the purpose of a tier billing structure?

The purpose of a tier billing structure is to incentivize customers to purchase more of a product in order to receive a better deal and increase the average order value for the seller.

Share This Article

Innovative pricing provides intelligent choices. Convert your business through Tiered Pricing for WooCommerce. Depending on quantity and discounts, develop dynamic pricing tiers.

Elevating Your WordPress Experience to Another Level.