Tiered Pricing
Definition
Tiered Pricing: Tiered pricing offers multiple product packages at different price points, each with different feature sets or usage limits. Common structures include good-better-best (three tiers) or freemium with paid upgrades. Effective tiers guide customers toward appropriate options while maximizing revenue across segments.
Example Usage
“Our three tiers—Starter, Growth, Scale—are designed for different company stages. 60% of revenue comes from the middle tier.”
Common Misconceptions
Related Terms
Freemium
Freemium is a business model offering a free version of the product with limited features, alongside paid tiers with additional capabilities. The goal...
Value-Based Pricing
Value-based pricing sets prices based on the perceived value to the customer rather than cost or competitor pricing. This approach requires deep under...
Seat-Based Pricing
Seat-based pricing charges based on the number of users accessing the product. It's simple to understand and scales with organization size. However, i...
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