What is Tier mode?

Introduction

This article explains the Tier mode control, which determines how multilevel pricing is calculated for Offers. Product Managers can choose from three tier modes to create different pricing strategies based on Quantity purchased: Volume, Graduated, and UpTo.

In this article:

• Understanding tier modes
• Volume tier mode
• Graduated tier mode
• Up To tier mode

Understanding tier modes

Tier mode is a control in Product Management that allows Vendors to switch between different multilevel pricing strategies. Each tier mode calculates pricing differently based on the Quantity purchased, enabling Vendors to create pricing structures that align with their business objectives.

Volume tier mode

The Volume tier mode applies a bulk discount strategy where the Price per unit decreases as Quantity increases. This mode sells each item at the Price of the last corresponding tier row.

How it works: When a Customer purchases a Quantity that reaches a higher tier, all units are priced at the rate of that highest tier. The greater the number of units purchased, the greater the Discount applied to the entire order.

Typical use case: License-Based Subscriptions where Vendors want to reward larger purchases with lower per-unit pricing across all Licenses.

Graduated tier mode

The Graduated tier mode applies discounts only to the additional items in each tier. This mode sells each item at the Price of its corresponding tier row, creating a progressive pricing structure.

How it works: As Customers purchase more units and move into higher tiers, only the units within each specific tier are priced at that tier's rate. Units in lower tiers maintain their original pricing. The Discount applies only to items that fall within the next tier.

Typical use case: Subscriptions where Vendors want to provide incremental discounts without reducing the Price of units already purchased in lower tiers.

Up To tier mode

The Up To tier mode applies a fixed Price regardless of how many units are purchased within a defined tier range. This mode sells all items for the Price of the corresponding tier row.

How it works: When a Customer selects a Quantity within a specific tier range, they pay the flat rate assigned to that tier, regardless of the exact number of units purchased. The Price remains constant whether they buy one unit or the maximum Quantity in that tier.

Typical use case: Non-License Offers where Vendors want to charge a consistent Price based on tier ranges rather than exact Quantities.

For detailed information on UpTo tier mode, refer to "How to calculate with tier mode Up to?"

Summary

Tier mode enables Vendors to implement different multilevel pricing strategies through three distinct calculation methods: Volume (applies the highest tier rate to all units), Graduated (applies tier rates progressively to units within each tier), and UpTo (applies a fixed Price per tier range). Product Managers select the appropriate tier mode in Product Management to align pricing with their business model and Customer purchasing patterns.