Maximize Sales Effectively with Shopify Tiered Pricing Discounts

Shopify tiered pricing discounts

If you are running a retail or wholesale business on Shopify, implementing tiered pricing discounts can help you sell more products and enhance your relationships with both B2B and B2C customers. But what exactly is tiered pricing? How do you create an effective tiered pricing strategy for your Shopify store? If you are looking for a solution to these questions, you’re in the right place!

In this article, we will explore various strategies for offering tiered discounts to your customers and provide a step-by-step guide on setting them up with Shopify.

1. What is Shopify Tiered Pricing?

Shopify tiered pricing discounts are a promotional pricing strategy that sellers use to encourage customers to buy more. Customers receive better prices when they reach certain tiers. The higher the order value, the greater the discount.

Tiered pricing is an effective strategy for selling products on Shopify. When customers see that they can earn more value by moving up to a higher tier, they are more likely to purchase a larger quantity of given products. This not only increases your store’s AOV but also enhances the relationship between your brand and its buyers, turning them into loyal customers.

2. Shopify Tiered Pricing vs Shopify Volume Discount

Tiered pricing and volume discounts are two popular pricing strategies on Shopify. Both methods incentivize customers to purchase more, but they work slightly differently. When you understand the differences clearly, you can choose the most proper approach for your business. Shopify Tiered pricing involves setting discounts based on the total amount customers spend, not the quantity of a single product. That means customers will get larger discounts when their total spending reaches higher tiers

For instance, Eddie Bauer, a retailer of apparel, footwear, and outdoor gear, implemented a campaign with limited-time tiered pricing discounts for its fall season products. Customers would enjoy discounts as follows:

  • $20 discount when spending $100
  • $30 discount when spending $125
  • $50 discount when spending $150
Eddie Bauer tiered pricing example
Eddie Bauer tiered pricing example

This strategy will encourage customers to spend more to reach the next discount tier. It’s helpful for stores looking to increase average order value (AOV).

Meanwhile, volume discounts are offered based on the quantity of a purchased product. Customers can receive greater discounts if they purchase more of the same product. For example, if you buy more than six Carhartt Velcro Hats from Kodiak Wholesale, you can get 18% off. If the number ordered is more than twelve, the discount will be 24% off.

Kodiak-Wholesale-volume-discount-example
Kodiak Wholsale volume discounts strategry

This method is simple to understand. It provides a uniform discount after a certain purchase volume is reached. It encourages customers to buy a larger number of specific products, so it’s a great way to clear inventory and boost sales of individual items.

In short, tiered pricing focuses on total spending, while volume discounts focus on the quantity of a single product. Both strategies can be effective for increasing sales and average order values.

3. Why You Should Use Shopify Tiered Pricing Discounts

Tiered Pricing Discounts can provide many advantages for your business. Below are several reasons why you should consider using them.

Have Higher Average Order Values and Sales Volume

Tiered pricing incentivizes customers to purchase more items to enjoy better price levels. As customers aim to take advantage of these discounts, they buy more. This increases their overall cart value, resulting in elevated average order values and boosted sales.

Read more: How to Create Quantity Price Breaks on Shopify Store to Boost AOV?

Improve Customer Satisfaction

When you offer tiered pricing, you are providing customers more choices and flexibility. Shopify Tiered pricing can bring a sense of value and exclusivity, making customers feel they are getting more for their money. So they are more likely to return to your store for future purchases. This fosters customer loyalty and retention.

Engage Many Customer Segments

Thanks to tiered pricing, you can serve different customer segments more efficiently. Some customers want to pay higher prices for smaller quantities due to their specific needs or budget limitations, while others prefer buying bulk to save money. For instance, wholesalers and traders seeking competitive pricing usually love tiered pricing discounts. Tiered pricing brings flexibility to your Shopify stores, making them appealing to a broader audience.

Enhance Inventory Management

Using tiered pricing can enhance inventory management for your Shopify stores. Incentivizing customers to purchase more helps move stock more quickly, reducing the risk of overstocking and obsolescence. It can also help clear out slow-moving or seasonal items, freeing up storage space for new products. So, it reduces storage costs and improves cash flow.

4. How to Create Shopify Tiered Pricing?

How Can You Implement Shopify Tiered Pricing?

Shopify offers various discount options with its built-in discount feature. However, it doesn’t directly support tiered pricing. This means you cannot set different price levels based on the order value purchased directly within Shopify’s native discount tools. Thus, you will need to look at third-party solutions that integrate seamlessly with Shopify to make it.

The BOGOS Free Gift app—BOGOS.io Free Gift Buy X Get Y—is one of the most effective options for creating Shopify tiered discounts. As a comprehensive Shopify discount app for creating gifts and offers, it allows you to implement many types of discounts for your store. It also supports advanced discounting options, including tiered pricing. In other words, it allows you to set multiple price levels, encouraging customers to purchase more by offering them better deals as their cart value increases.

BOGOS Free Gift app was launched in 2014 and has become a popular software on Shopify. The app was built with various features, including:

  • A wide range of promotions, including BOGO, Free Gift with Purchase, and Product Bundles.
  • Customizable rules based on URL, location, order history, and customer tags.
  • Real-time analytics for optimizing offer performance.
  • Advanced customization options for promotions.

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Step-by-Step Guide to Create Shopify Tiered Pricing Discounts With BOGOS

Step 1: Install BOGOS via Shopify app store. Then Click Create Offer

Bogos create offer

Step 2: Choose Create Custom to create a custom offer

Bogos create custom offer

Step 3: Choose condition: 

In the Offer main condition section > Add Main Condition > Choose Cart Value Multiplier Condition > Add this condition.

Cart value multiplier condition

Step 4: Set up condition:Fill in the Multiply Base Value (e.g., you want customers to receive 1 gift when their cart value is above $100, 2 gifts when their cart value is above $200, then set Multiply Base Value as $100).

set up main condition

Then, choose the products to which the condition will apply. Remember that BOGOS allows you to adopt this tiered pricing condition to:

  • any products in the store
  • all except certain products
  • all except certain types/vendors/collections
  • only selected products
  • only selected types/vendors/collections

Step 5: Select gifts: Choose the Gift Discount Type of the offer. You can adjust the gift discount percentage and the number of gifts customers receive.

Select gift products

Step 6: Click Publish to publish your offer on your Shopify store immediately. Click Save draft to save the offer setup first, but not publish it yet.

Read more: Top 10 Most Used Shopify Tiered Pricing Apps in 2024

5. Best Practices for Using Shopify Tiered Pricing Discounts

Understand Your Customers

Before establishing tiered pricing, you must understand your customers and their purchasing behaviors. You can conduct in-depth market research or analyze data from your previous sales to identify patterns. 

You should know whether your customers will be more likely to buy in small quantities or in bulk, what price points can bring the highest conversion rates and more. When understanding these details, you can tailor your tiered pricing strategy to meet your customers’ needs better.

Set Clear and Logical Tiers

When setting up tiered pricing, make sure the tiers are clear and logical. You need to make discount levels easy to understand, as complicated tiers can confuse customers.

Your goal is to incentivize customers to purchase more without overwhelming them with complex pricing structures. You should also clearly display the discount tiers and thresholds on your product pages so that customers can easily know what they need to spend to get each level of discount.

Ensure Profitability

It is crucial to ensure that your tiered pricing does not compromise your profit margins. To do so, you must assume and calculate your total costs. Then, determine the minimum price for selling your products without incurring losses.

Incentivizing your customers to buy more products is great, but remember that it will increase your costs regarding order fulfillment. So don’t forget to consider shipping costs and related expenses. Use this information to set your pricing tiers in a profitable way.

Promote Your Tiered Discounts

You need to promote your tiered pricing discounts to make it reach a wide audience and attract more customers. Email campaigns, paid advertising, or social media posts can be used to market it.

No matter which marketing channels you choose, you need to create appealing content and visuals to highlight the benefits of your tiered pricing. You may also leverage techniques like countdown timers or limite­d-time offers to create a sense of urgency to drive conversions.

Analyze Performance Frequently

When you have adopted your tiered pricing strategy, you need to regularly monitor its performance. Tools like BOGOS have integrated real-time analysis that helps you handle this piece of work. 

It allows you to understand how well your strategy is working. Thanks to it, you can also know where adjustments are needed. Thus, you can tweak your pricing tiers or promotional messaging to improve your performance.

Leverage Seasonal and Special Promotions

A great way to maximize tiered pricing’s impact is by incorporating it into your seasonal and special promotions. For instance, during the holiday season, you could offer additional discounts besides your existing tiered pricing to attract more customers. Similarly, tiered discounts during clearance sales can be used to move large quantities of inventory quickly. These special promotions can create a sense of urgency and push customers to take advantage of the discounts while they last.

Monitor Inventory Levels

Last but not the least, don’t forget to monitor your inventory. You should ensure the alignment between your discount offers and inventory to prevent stockouts or overstocking. If certain items sell out rapidly during promotions, think about restocking or modifying discounts to keep the momentum going while ensuring profitability.

6. Conclusion

Shopify tiered pricing is an attractive strategy that helps you to increase sales and boost revenues. It’s easy for you to create Shopify tiered discounts with feature-rich Shopify discount apps like BOGOS. Consider this approach within your business and promotion strategies, analyze it carefully, and then try it to enhance your offerings and experience the impact it has on your Shopify store.

7. FAQs

Is Tiered Pricing Good?

Yes, it is. Tiered pricing can be an effective strategy for businesses to grow. It incentivizes customers to buy more by offering discounts at different pricing levels. Therefore, it increases the average order value and sales volume.
This strategy also improves customer satisfaction by providing better deals and helps clear inventory efficiently. Yet, it’s important to carefully plan and monitor tiered pricing to ensure it remains profitable and aligns with customer behavior.

Can You Offer a Tiered Discount on Shopify?

Yes, you can. However, it requires the use of a third-party app as Shopify’s built-in discount feature does not directly support tiered pricing. Apps like BOGOS allow you to set it up quickly with flexible rules.

What Are the Cons of Tiered Pricing?

Though tiered pricing is advantageous, it also has drawbacks. It can be a little complicated to implement and manage. If the tiers are not clearly communicated, it can confuse customers.
It may also lead to reduced profit margins if discounts are too aggressive. In addition, careful inventory management is required to avoid stockouts or excess inventory. You need to balance attractive discounts with profitability, ensuring that the pricing strategy aligns with your overall goals.

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