How to calculate with tier mode - Volume?

Introduction

This article explains how the Volume tier mode applies bulk discount pricing. The Volume tier mode is a pricing strategy where the Price per unit decreases as Quantity purchased increases, and the discount rate of the highest tier reached applies to all units in the Order.

In this article:

• Understanding the Volume tier mode
• Setting up Volume pricing tiers
• How Volume pricing is calculated

Understanding the Volume tier mode

The Volume tier mode is a pricing strategy that rewards bulk purchases by applying discounts to the entire Order based on the total Quantity. Unlike Graduated pricing, which applies different rates to different Quantity ranges, Volume pricing applies a single rate—the rate of the highest tier reached—to all units purchased.

Key characteristics

• Sells each item at the Price of the last corresponding tier row
• The greater the number of units purchased, the greater the Discount allowed
• All units are priced at the same rate based on total Quantity
• Creates strong incentives for larger purchases

Setting up Volume pricing tiers

To configure Volume pricing:

1. Navigate to the Price section in Product Management.
2. Set the Billing Period (for example, Monthly).
3. In the Formula section, select "Quantity Price Table."
4. Configure the Quantity Control (for example, "CPU").
5. Set Tier Mode to "Volume."
6. Define your pricing tiers in the table:

Tier A: For Quantities 1 to 10

• Min (inclusive): 1
• Max (inclusive): 10
• Cost Price: Enter the wholesale Price per unit (for example, 10)
• Suggested Retail Price: Enter the retail Price per unit (for example, 11)

Tier B: For Quantities 11 to 20

• Min (inclusive): 11
• Max (inclusive): 20
• Cost Price: Enter the discounted wholesale Price (for example, 9)
• Suggested Retail Price: Enter the discounted retail Price (for example, 10)

Tier C: For Quantities 21 to 30

• Min (inclusive): 21
• Max (inclusive): 30
• Cost Price: Enter the further discounted wholesale Price (for example, 8)
• Suggested Retail Price: Enter the further discounted retail Price (for example, 9)

7. To add additional tiers, select "Add new row" and configure the next tier.
8. Set Included Quantity to 0 unless you want to provide free units.

How Volume pricing is calculated

The Volume tier mode calculates pricing by applying the rate of the highest tier reached to all units in the Order:

Tier B example (Quantity = 18)

When a Customer purchases 18 items, the Order falls within Tier B (11-20 units).

Calculation:

• All 18 items are priced at Tier B rates
• Suggested Retail Price per unit: 10
• Total Price: 18 × 10 = 180

The Customer receives the Tier B rate on all 18 units, not just the units above 10.

Tier C example (Quantity = 25)

When a Customer purchases 25 items, the Order falls within Tier C (21-30 units).

Calculation:

• All 25 items are priced at Tier C rates
• Suggested Retail Price per unit: 9
• Total Price: 25 × 9 = 225

The Customer receives the best rate (Tier C) on all 25 units, creating a strong incentive to purchase in larger Quantities.

Important principle: The Price is applied to the whole number of units. Once a Customer's Quantity reaches a new tier, all units—including those that would have been in lower tiers—receive the pricing of the highest tier reached.

Comparison with other tier modes:

Volume tier mode:

• 18 units at Tier B: 18 × 10 = 180
• All units at one rate

Graduated tier mode (for comparison):

• 18 units: (10 × 11) + (8 × 10) = 190
• Different rates for different ranges

This makes Volume pricing more attractive for large purchases but potentially less profitable for Vendors on high-volume Orders.

Summary

The Volume tier mode applies a bulk discount strategy where the Price per unit decreases as Quantity increases, and the discount rate of the highest tier reached applies to all units in the Order. Product Managers configure multiple pricing tiers with progressively lower Cost Price and Suggested Retail Price values. When Customers select a Quantity, all units are priced at the rate of the highest tier reached—for example, purchasing 18 units in Tier B (11-20) prices all 18 units at the Tier B rate. This creates strong incentives for larger purchases by rewarding Customers with better per-unit pricing across their entire Order. Volume pricing is ideal for License-Based Subscriptions and other Offers where Vendors want to maximize Order size and reward bulk purchases.