How can you encourage customers to buy more from your e-commerce store? A tiered pricing structure is a great way to attract new customers and reward existing ones, while also increasing average order size and improving overall sales.
In this post, we’ll explain what tiered pricing actually is, and why you might want to use it. Then we’ll walk you through setting up a tiered pricing structure in WooCommerce. Let’s get started!
What Is a Tiered Pricing Structure?
Tiered pricing is a type of discount offered in e-commerce stores to increase sales. This technique can help you appeal to a wider customer base, since you’re accounting for various demand rates and price points.
In a nutshell, tiered pricing is when your rate changes based on the number of products a customer purchases. The more they buy, the greater the discount they’ll receive:
With tiered pricing, you can better serve all of your potential customers. It accommodates larger businesses or customers that have a high demand for your product, while encouraging smaller customers to buy more.
It’s worth noting that this strategy is not the same as “volume pricing.” In that setup, the total cost of an order is reduced based on the volume of items that are purchased. With a tiered pricing structure, the buyer pays the lowest-tier price for the first X items, the next-tier price for the following Y items, and so on.
Why Should You Consider Using Tiered Pricing in WooCommerce?
As with any e-commerce strategy, tiered pricing isn’t right for every store. So how do you know if it’s the right fit for your needs?
There are various reasons you might introduce tiered pricing into your e-commerce store. This technique enables you to:
- Create product bundles
- Incentivize bulk purchases
- Encourage the purchase of specific products such as clearance items
- Set up a simple rewards program for existing customers
- Encourage customers to buy more of your product
- Provide a variety of pricing options for customers to choose from
- Increase earnings per product sold, unlike with volume pricing
- Attract new customers, as price adjustments position your e-commerce store as competitive
- Reward existing customers, improving retention rates
Tiered pricing is particularly valuable for larger stores and those that tend to sell items in bulk. For similar reasons, it can be ideal for B2B and wholesale sellers.
How to Create a WooCommerce Tiered Pricing Structure (In 3 Steps)
Now that you know a little more about tiered pricing structures, let’s take a look at how you can set one up in three easy steps. For the purposes of this tutorial, we’ll assume that your e-commerce store runs on WooCommerce. If not, the first thing you’ll need to do is set up WooCommerce and add your products.
Step 1: Install the Discount Rules for WooCommerce Plugin
WooCommerce doesn’t come with a built-in way to create tiered pricing, and setting this up manually can be tricky. So the best way to create a WooCommerce tiered pricing structure is to use a plugin.
While there are a few options out there, we’ll be using the Discount Rules for WooCommerce plugin, since it’s a free, reliable, and user-friendly tool:
Just go to Plugins > Add New in your dashboard and search for the plugin. Then you can install and activate it.
Step 2: Create Your Tiered Pricing Rules
To start configuring tiered pricing, you can now navigate to WooCommerce > Woo Discount Rules, and then click on Add New Rule:
This is how you will create your discounts. In the first field, you’ll give the rule a name. Then you’ll want to select “Bulk Discount” under Choose a discount type. This will give you access to various options you can use to customize your tiered pricing structure:
Under Filter, you can choose to apply this rule to all of the products in your store, or only specific ones. You can also exclude specific products and/or categories.
Next, check out the Discount section. Under Count Quantities by, you’ll want to choose “Individual product.” This will ensure that your pricing discounts are only applied when customers buy certain amounts of a single item.
Then you can enter your desired pricing tiers in the following fields. For example, let’s say we want to offer a $5 discount if a customer buys more than 10 of Product X, and a $7 discount if they buy 50 or more.
To do this, we can start by entering the following data:
- “11” in the min field
- “49” in the max field
- “Fixed discount” under Discount Type
- “5” under Discount Value
- “Tier 1 Discount” (or whatever name you prefer) under Title Column for Bulk Table
Then we can hit Add Range and use the second line to add our next pricing tier. Here’s what the result looks like:
You can also select “Percentage discount” under Discount Type if you want your tiers to be percentage-based. For example, you could offer a 5% lower price if the customer buys 11 to 49 items, and a 10% lower price on 50+ items.
If you have the premium version of the plugin, you’ll also get access to a third option: “Fixed price for item.” This will enable you to choose set prices for each level, rather than basing your tiered system on discounts.
Once you’re finished, make sure the Enable box is checked, and save your rule to make it active on your storefront!
Step 3: Display Your Pricing Tiers
Last but not least, you’ll need to make sure customers know what kinds of discounts they can get by purchasing various quantities. Fortunately, the Discount Rules for WooCommerce plugin comes with a built-in way to do this.
Go back to WooCommerce > Woo Discount Rules, and then click on the Settings tab. This tab gives you access to a wide array of options for customizing how the plugin works. For our purposes here, we’re interested in the Product section:
Under Show discount table, you’ll want to choose “Yes.” This will make a pricing table appear on any relevant product pages:
You can use the other settings here to customize the table’s appearance and labels if you like.
Conclusion
While new customers are important, the best way to grow your e-commerce store is often to incentivize existing customers to buy more. Tiered pricing does that in a way that’s highly effective, because it’s a win-win proposition (customers feel like they’re getting a better deal when they place bigger orders).
Do you have any questions about how to set up an effective tiered pricing structure? Let us know in the comments section below!
Image by Markéta Machová