Adding WooCommerce tiered pricing to your online store is a great way to encourage customers to spend more per transaction. With tiered pricing, the total cost reduces as customers ‘fill’ each tier.
Put simply, tiered pricing is one of the best ways to increase your average order value and boost profits. Essentially what you’re doing is defining the product’s price per unit within a range.
With this in mind, in this article, we’ll cover everything you need to know about WooCommerce tiered pricing, including:
- What is tiered pricing in WooCommerce?
- Examples of the tiered pricing model
- How tiered pricing might benefit your business
- Introducing the WooCommerce Fees and Discounts plugin
- How to create tiered pricing rules using the WooCommerce Fees and Discounts plugin
Let’s start by explaining what tiered pricing is in the context of WooCommerce.
What is tiered pricing in WooCommerce?
In its simplest form, a tiered pricing strategy is where you offer customers a discount based on how many unit products they purchase. The more units they purchase, the greater the discount.
With a tiered pricing model, you offer customers a lower rate per product once the product quantity threshold you’ve specified is met. Let’s say, for example, you create four tiers:
- 1-20 units cost $15 each
- 21-50 units cost $10 each
- 51-75 units cost $8.50 each
- 76 units and above cost $7 each
If a customer places an order for 60 units, they would pay:
(20 * 15) + (30 * 10) + (10 * 8.50) = $685
So, the total cost reduces as the customer fills each tier. As a store owner looking to implement a tiered pricing strategy, the first thing you need to do is define a price per unit within a range. These ranges will be your tiers.
Many times, people confuse tiered pricing with volume pricing. Unlike tiered pricing, volume pricing is when you define a price for all units within a range. If the tiers we defined above were for a volume pricing strategy, the total cost would have been $510 i.e. (60 * 8.50).
Now that we have a better understanding of what tiered pricing is, let’s step through some quick example of when you might consider implementing a tiered pricing model.
Examples of the tiered pricing model
There are many scenarios where you might consider following a tiered pricing structure.
Example #1: SaaS products and subscriptions
If you have a SaaS product, you might consider selling subscriptions or licenses using tiered pricing.
- 3GB for $40 per month
- 5GB for $55 per month
- 10GB for $75 per month
Email marketing services:
- 0 to 2,000 contacts for $1.99 per month
- 2,000 to 10,000 contacts for $3.99 per month
- 10,000 to 20,000 contacts for $9.99 per month
Example #2: Wholesale goods and bulk purchases
If you’re a wholesale seller, you can maximize profits by selling using tiered pricing. Since units purchased from lower tiers cost more than those in higher tiers, you’ll end up making more money than if you were to go with a volume pricing strategy.
This is great for store owners that sell wholesale goods (such as apparel, cookware sets, sports equipment, and mobile accessories) or hardware products (such as screws, nuts, and bolts).
Example #3: Discounts
Instead of selling WooCommerce products following a tiered pricing model, you can do things a little differently and offer discounts following the same pricing structure. In other words, you would offer a larger discount for a higher tier purchase.
Customers who purchase:
- 1-20 units get 5% off
- 21-50 units get 7% off
- 51-75 units get 10% off
- 76 and above units get 12% off
You can also use this system to offer discounts on cash on delivery fees.
Example #4: Photography
If you’re a photographer, you might consider creating packages using tiered pricing. For example, you could three different packages:
- Up to 65 photos and 10 retouches for $200
- 66 to 85 photos and 15 retouches for $175
- 86 to 100 photos and 15 retouches for $165
Tiered pricing is great for businesses that sell products and for businesses offering services. Depending on the type of business you’re running, you might charge customers a different price or offer a discount for each tier.
How tiered pricing might benefit your business
As we mentioned above, selling using a tiered pricing strategy will net you more profits than if you were to sell using volume pricing. Aside from this, here are some of the key benefits of the tiered pricing model:
- Encourages customers to buy larger quantities of a product. Tiered pricing entices customers to purchase more units per transaction with the promise of reduced costs for units bought from higher tiers. This is a great way to increase your average order value.
- Increased profit per product sold. Unlike volume pricing, you won’t experience a drop in profits with tiered pricing. In other words, you won’t generate less revenue per sale if customers decide to purchase a number of units where the threshold you define significantly drops the price for all units.
- Lets you offer options, choices, and add-ons. With tiered pricing, you have room to offer customers various pricing options that can ultimately help you increase your bottom line. Following our photography example, a customer might purchase your entry-level package and upgrade to a mid-tier if they’re satisfied with the service.
Introducing the WooCommerce Fees and Discounts plugin
Out of the box, WooCommerce doesn’t let you create a tiered pricing structure for your products. The easiest way to get started is by using the WooCommerce Fees and Discounts plugin to create tiered pricing in WooCommerce.
WooCommerce Fees and Discounts is a robust WooCommerce tiered pricing plugin that’s designed to help you maximize profits.
- Dynamic pricing rules. You can set different prices or offer discounts by creating dynamic pricing rules in WooCommerce. For instance, purchase 1 to 10 units at $0.99 per unit and purchase 10 to 20 units at $0.85 per unit.
- Bulk pricing discounts. This WooCommerce tiered pricing plugin lets you automatically apply different discounts for products based on the quantity added to the cart. This is the easiest way to create multiple pricing tiers. The plugin also displays the pricing tiers you create in a neat table layout.
- User role based pricing. The user role based pricing feature makes it easy for store owners to create different pricing tiers for different customers. This is great for stores that sell to both B2B and B2C customers. For more information, check out this article on user role pricing in WooCommerce.
As you can probably guess, explaining tiered pricing to customers can be difficult. WooCommerce Fees and Discounts lets you display pricing tiers in a neat table layout which makes it easy for customers to understand the breakdown of charges. It also displays the discounted price (along with how much you’ve saved) in the shopping cart at checkout.
Additionally, it comes with built-in features to offer bulk pricing with fine-grained control over WooCommerce products. It’s also worth mentioning that the plugin gives you tons of options for payment gateways.
How to create tiered pricing rules using the WooCommerce Fees and Discounts plugin
Here, we’ll explain how you can create WooCommerce tiered pricing rules using the WooCommerce Fees and Discounts plugin. For this tutorial, we’ll assume you already have WooCommerce set up on your WordPress website and some WooCommerce products added to your online store.
Step #1: Install and activate the WooCommerce Fees and Discounts plugin
Get the WooCommerce Fees and Discounts plugin and install it to your WordPress website.
Once you’ve activated the plugin, head over to WooCommerce > Settings > Fees and Discounts > License to enter your license key.
Step #2: Enable the dynamic pricing option
Before you can begin creating WooCommerce pricing tiers, you need to enable the dynamic pricing option. To do this, navigate to WooCommerce > Settings > Fees and Discounts and ensure that the ‘Enable Dynamic Pricing’ option is ticked.
Click the Save changes button to proceed.
Step #3: Create tiered pricing rules
The first thing you need to do for WooCommerce tiered pricing is to create tiered pricing rules. Go to WooCommerce > Settings > Fees and Discounts > Dynamic Pricing to get started.
You can use the Pricing table option to define where you’d like to display the tiered pricing table (either before or after the add to cart button) or hide it.
You should also see a set of options prompting you to define Pricing Rule #1. Here’s what you need to do:
- Use the dropdown menu to set ‘Offer type’ to ‘Bulk Pricing’.
- Enter some text in the ‘Label’ field to display information about the tiered pricing structure. This will show up next to the product’s price on the product page.
- Use the dropdown menu next to the ‘Applies to’ field to select which products you’d like to apply the tiered pricing structure to. You can choose to apply it to all of your WooCommerce products, products in a specific category, or specific products.
- The ‘Tiers’ option lets you create WooCommerce tiered pricing rules based on the quantity of products in the shopping cart.
In the next step, we’ll show you how to add tiers to the pricing rule.
Step #4: Add tiers to the pricing rules
Click the ‘Add New Tier’ button to create the first tier. With WooCommerce Fees and Discounts, you can create as many tiers as you’d like by setting the:
- Min quantity – the minimum quantity a customer has to purchase to be eligible for the tier.
- Max quantity – the maximum quantity (upper limit) of the tier.
- Adjustment – choose between ‘fixed discount’, ‘percentage discount’, ‘fixed fee’, or ‘percentage fee’.
- Amount – the amount charged (or discounted).
- Label – label that’s displayed under the ‘Subtotal’ column in the cart at checkout.
Let’s say you want to create four pricing tiers:
- 5% discount when you purchase 1-20 units
- 10% discount when you purchase 21-50 units
- 12% discount when you purchase 51-75 units
- 15% discount when you purchase 76 or more units
It would look something like this:
Notice that the ‘Max quantity’ for the fourth tier is empty. This means that customers will get a 15% discount if they purchase 76 units or more.
For each tier, the ‘Adjustment’ field is set to ‘Percentage Discount’ since we’re creating a tiered pricing structure. I’ve also entered some text in the ‘Label’ field to make it easier for customers to understand the tiered pricing structure. This label will be displayed in the cart.
Step #5: Display tiered pricing table on the product page
WooCommerce Fees and Discounts automatically displays the WooCommerce tiered pricing table on the product page. It will look something like this:
Your product page might look slightly different depending on which theme you’re using and if you decided to display the tiered pricing table before the add to cart button.
When customers set a product quantity and add the product to cart, it will look something like this:
Note that the ‘15% discount’ label is displayed under the discounted total in the ‘Subtotal’ column.
This is the simplest way to apply WooCommerce tiered pricing to your products. To take things to the next level, you can create tiered pricing rules for specific categories of products (such as ‘T-Shirts’) or for specific products (such as ‘Long Sleeve Tee’).
There’s more information on WooCommerce dynamic pricing here.
Most businesses can benefit from selling using a WooCommerce tiered pricing strategy. We explained what tiered pricing is and how you can create tiered pricing rules in WooCommerce using a plugin.
- A WooCommerce tiered pricing strategy lets you offer customers a lower rate per product once the product quantity threshold you’ve specified is met.
- WooCommerce tiered pricing lets you offer valuable discounts to customers while maximizing your profits and increasing your average order value.
- Tiered pricing is more profitable than volume pricing.
- The easiest way to create a tiered pricing structure for your store is by using the WooCommerce Fees and Discounts
Hopefully, you’re in a good position now to take the next steps.
Do you have any question about how to set up WooCommerce tiered pricing on your store? Let us know in the comments section below.