***

title: Tiered pricing
subtitle: >-
Charge different prices based on quantity thresholds using volume or graduated
tiers.
------

# Overview

Use **tiered pricing** when the price per unit changes based on quantity thresholds. Tiered pricing supports two calculation methods: **volume pricing** (single rate for all units) and **graduated pricing** (different rates for each tier portion).

**Common use cases include:**

* SaaS seat pricing with quantity discounts
* API calls with tiered consumption rates
* Bulk purchase discounts
* Utility billing (electricity, water, cloud storage)

***

# Volume pricing

With volume pricing, a single per-unit price applies to **all units** based on the total quantity purchased. The more units a customer buys, the lower the price per unit can be.

## How volume pricing works

* Define **quantity tiers** with per-unit prices
* Determine which tier the total quantity falls into
* Apply that tier's price to **all units**

## Example: SaaS seats

```typescript
Product: Team Plan
Quantity tiers:
1–10 seats: $10/seat
11–50 seats: $9/seat
51+ seats: $8/seat

Customer purchases 12 seats
→ Falls into 11–50 tier
→ Price per seat = $9
→ Total = 12 × $9 = $108
```

***

# Graduated pricing

With graduated pricing, each portion of a customer's quantity is billed at a **different rate** based on the tier it falls into. This provides more granular pricing that rewards higher-volume usage.

## How graduated pricing works

* Define **quantity tiers** with per-unit prices
* Each tier applies only to the portion of quantity within that tier
* Total charge = sum of charges for each tier portion

## Example: API calls

```typescript
Product: API Access
Quantity tiers:
1–1,000 calls: $0.01 per call
1,001–5,000 calls: $0.008 per call
5,001+ calls: $0.005 per call

Customer makes 3,000 calls:
- First 1,000 calls × $0.01 = $10
- Next 2,000 calls × $0.008 = $16
- Total = $26
```

***

# Volume vs. graduated pricing

| Aspect            | Volume                       | Graduated                        |
| ----------------- | ---------------------------- | -------------------------------- |
| Price calculation | Single rate for all units    | Different rates per tier         |
| Best for          | Bulk discounts, seat pricing | Usage-based billing, utilities   |
| Customer benefit  | Predictable per-unit cost    | Fair pricing for each usage tier |

## Volume pricing example

```typescript
100 units with tiers: 1-50 @ $10, 51-100 @ $8

Volume: All 100 units @ $8 = $800
```

## Graduated pricing example

```typescript
100 units with tiers: 1-50 @ $10, 51-100 @ $8

Graduated:
- First 50 units @ $10 = $500
- Next 50 units @ $8 = $400
- Total = $900
```