5 Reasons Why Discounting Using Tiered Pricing is a Winning Strategy for Shopify Stores
Looking for an easy win that’ll boost sales and your CFO’s mood? Look no further than tiered pricing. Tiered pricing is a pricing strategy that implements and assigns prices to various product tiers, usually as a means of offering volume discounting. This pricing strategy results in higher AOV, higher sales, higher revenue, and ultimately higher customer satisfaction and loyalty. It’s a win-win strategy for your Shopify store and something you should probably be implementing if you’re not already.
Read on to learn more about tiered pricing and all the reasons why you should implement it, like, ASAP.
First Thing’s First: What Even IS Tiered Pricing?
Tiered pricing is a pricing strategy that encourages customers to buy more. It’s an easy way to derive additional value from each and every customer that visits your Shopify store, particularly when it’s used as a means to drive volume discounting.
Volume discounts can be very effective when paired with tiered pricing. Different purchase quantities are segmented into various tiers, and each tier retains a unique per-unit price. The higher the tier — in other words, the higher the quantityand the more the customer buys — the lower the unit price.
Now that we’ve identified what tiered pricing is, let’s get into the meat of it: why you should be implementing this strategy in your Shopify store.
5 Reasons to Implement Volume Discounts Using Tiered Pricing
1. Incentivizes Customers to Buy More
With a tiered pricing strategy, customers are promised that the more they buy, the more they save. In other words, they’re getting more bang for their buck with each successive tier. Thus, it isn’t super shocking that customers would be incentivized to buy more, more, more with a tiered pricing strategy.
2. Increases AOV
Buying more items also means (*drumroll*) higher AOV, or higher average order value. It’s simple math: the more items they buy, the higher their cart value.
3. Boosts Sales and Revenue
Simple math, continued: Buying more also means more sales, which in turn leads to more revenue at the end of the day. It’s safe to bet that your CFO will be pleased.
4. Increases Customer Satisfaction and Loyalty
Customers are happier with their perceived “bigger bang for their buck.” These happier customers, in turn, are more likely to come back later and shop for more…and more…and even more. This also results in more money in your business’s bank account, as acquiring a new customer can cost up to 7x more than just retaining an old one.
5. Attracts a Wider Range of Customers
With more pricing tiers — and pricing options — you can attract a more diverse array of customers. While tiered pricing can be particularly attractive for those looking for a bulk purchase discount, the diversified pricing tiers are appealing to those with specific budgets or priorities.
Volume Discounts Using Tiered Pricing, In Real Life
Looking at this chart, you notice that if you buy at least 2 glasses, you’ll receive a 12% discount. If you buy at least 4 glasses, you’ll receive a 25% discount. If you buy 12, you’ll receive a 40% discount. If you buy 20, you’ll receive a 43% discount. And if you buy 100? You’ll get a whole 50% off.
Even if a customer was initially planning to buy just one glass, this sort of tiered pricing chart psychologically entices them to buy more once they realize how much they can potentially save. In your case, you decide to buy 3 more glasses for a total of 12 in order to snag that 40% discount. (You can just keep the spares for your home bar — they are 40% off, after all.)
When you add the 12 glasses to your cart, the 40% discount automatically applies for a seamless checkout experience. And even better: you’re told that you saved $144 on your whiskey glasses! Even though you actually spent $14 more than you intended (good for Crystal Imagery!), you’re under the impression that you saved. Thus, tiered pricing is really a win-win for both Shopify merchants and customers alike.
Try out the 14-day free trial to see for yourself. You have so many sales to gain, and nothing — literally $0 — to lose.