pricing tiers
Also called: pricing tier, tiered pricing, price tiers, pricing plans
Several versions of a product at different prices, usually two to four, each aimed at a different kind of customer. Tiers let small customers start cheaply and larger ones pay more for more value.
Pricing tiers are a small set of plans, typically Basic / Standard / Pro or similar, that package the same product at different prices for different customers. They exist because customers differ: a small customer won't pay for features built for a large one, and a large customer would happily pay more than the small one's price.
Good tiers differ along the value metric and along what different customer types actually need, not along random features. Each tier should have a clear "who it's for" that a customer can recognize in a few seconds. Three tiers are common because the middle one tends to be chosen most: the top tier makes it look reasonable, and the bottom tier catches price-sensitive customers without undercutting everyone else.
A young product usually does best with one plan, or one plan plus a yearly option. Tiers add complexity to sell, support and build, and they're easy to get wrong before you know which customers really exist. Add a tier when a real, recurring group of customers needs something different: much bigger accounts, a very different usage pattern, or a group that can only afford less.
Example
GarageDesk starts with one plan: 600 UAH per shop a month, or 6,000 UAH a year. Two groups later push for something different:
- Franchises and chains: a franchise wants its shops connected at a lower price. Instead of custom work, it gets a volume price of 450 UAH per shop for the standard product.
- Tire shops: they'd need reminders only twice a year and could pay about 300 UAH a month. The founders put them on the "later" list, because a cheaper tier would also need seasonal reminders and new sales channels.
Suppose they later formalize this: a Garage plan at 750 UAH per shop for new customers and a Network plan at 450 UAH per shop for groups of, say, 5 or more shops. Two tiers, each with an obvious "who it's for".
Common mistakes
- Tiers before customers. Designing three plans on day one usually means guessing.
- Tiers split by random features. Split by who the customer is and how much value they get.
- Too many tiers. More than three or four slows the decision and the sale.
- A bottom tier that's good enough for everyone. Then nobody moves up, and it quietly becomes your price.