The tiered pricing is commonly used in SaaS, finance, health, digital marketing, and other similar industries. It is seen as a go-to pricing model for companies providing services, no matter what kind. It may be truly effective or not, depending on how well it fits your business and whether you follow essential guidelines. In this post, I’ll:
- introduce a definition of tiered pricing,
- indicate its most popular types,
- explain how to calculate it,
- present a few examples of tiered pricing (along with actionable tips for crafting one),
- unveil best practices for increasing conversion rate,
- and point out how to create tiers.
As you go through the read, bear in mind that even small pricing adjustments can have a major impact on a company’s revenue. This is precisely what Alexandre Dolgui and Jean-Marie Proth demonstrated in their research article.
No further ado, let’s cut to the chase.
What Is Tiered Pricing?
Tiered pricing is one with several price “tiers”, each packed with specific products, services, features or benefits. It’s super-flexible, catering to different customer segments, needs, and budgets.
Imagine a subscription service offering three plans: Basic, Pro, and Premium. The first plan may include just the essentials (must-haves for small businesses), the second – extend functionalities (to satisfy mid-sized companies), and the third – can go with custom solutions (tailored to agencies or enterprises with very specific needs). That’s it! This is exactly how the tiered pricing model works. Just have a glance at the following illustration by Zendo:

Tiered Pricing Model – Top 4 Strategies
Tiered pricing comes in different strategies. They are addressed to various audience segments in terms of budgets, personas and preferences. Also, each tiered pricing strategy works best for specific products or industries. It’s almost begging for a quick overview.
Feature-Based Tiering
Feature-based pricing is when different pricing levels unlock additional features or functionalities (e.g., basic, pro, enterprise plans).
This pricing strategy is the best for SaaS companies offering scalable tools with different functionalities (e.g., project management software, landing page builders, client portals, SEO platforms).
Usage-Based Tiering
A tiered pricing strategy can center around how much users use a service. It may be counted with:
- the number of transactions,
- data consumption,
- or API calls,
ensuring that heavier users pay proportionally more.
It could be a match for services with variable consumption rates, like cloud storage or API-based platforms.
Subscription-Based Tiering
This strategy goes with different pricing tiers based on access, features, or benefits over a recurring billing cycle (e.g., monthly or annually).
It’s tailored to, e.g., streaming services (Netflix, Spotify, etc.), online learning platforms, and many SaaS companies too.
User-Based Tiering
In this type, pricing tiers vary depending on the number of users who can access the product or service.
Such an approach is particularly recommended for team-based tools where access scales with the number of users (e.g., CRM, collaboration platforms).
Naturally, the types highlighted above are just the most common ones. It’s not a struggle to come across tiered pricing based on:
- performance,
- support options,
- access level,
- geography,
- or hybrid solutions.
How do You Calculate Tiered Pricing Levels?
Tiered pricing can be calculated based on factors like total usage volume, user count, and feature access, depending on the chosen marketing strategy, customer needs and budgets, industry standards, and competitive landscape.
Although there is no golden rule or universal algorithm on how to calculate multiple-tier pricing, the standard practice (albeit followed not without exceptions) is that as the tier gets pricier, the cost per unit decreases (whether it’s per user, tokens, storage space, etc.). Here is the simulated calculation:
- Basic tier with 1 user seat and 200 tokens for $20 per month,
- Medium tier offering 2 user seats and 500 tokens for $35 per month,
- Premium tier including 5 user seats and 2000 tokens for $89 per month.
Developing pricing tiers should be deeply rooted in who is your target audience and what are your and your customers’ expectations (also, financial capabilities, etc.). Strategic decisions in this realm should be informed by data-driven insights, not gut feelings or assumptions.
Tiered vs Volume Pricing – Key Differences
In the tiered pricing model, prices per unit (of something) usually decrease as you select higher plans, while for volume-based pricing, prices per unit are fixed and increase proportionally as you order more quantity. It’s very easy to grasp with the example. Take a look at the following pricing tiers by Semrush (tiered pricing model):

See the parts framed with violet? Each tier offers more projects, keywords, and results per report. What we can do with these numbers is calculate the price per unit:
Asset ⬇ / Plan ⮕ | Pro | Guru | Business |
1 x Project | $23,46 | $13,88 | $10,41 |
1 x Keyword | $0,234 | $0,138 | $0,083 |
1 x Results in report | $0,0117 | $0,0069 | $0,0083 |
As you see, the higher the tier, the lower the price. Simple, right?
Keen-eyed may have spotted an exception in the table – in the bottom-right cell. Anyway, the overall tiered pricing rule remains valid:
Higher Tier = Lower Price per Unit
Ok, but what is then volume pricing model? Let’s assume that instead of different tiers, Semrush offers a fixed price per unit. May it be:
- $15 per project,
- $0,150 per keyword,
- $0,0080 per set of “results in report”.
In this case, there are no tiers! Customers pay the price multiplied by the quantity purchased (number of units).
To sum it up, both tiered and volume pricing enable purchasing in bulk, but tiers usually offer predefined packages with predefined limits, while volume pricing determines the price per single item (typically, no limits apply).
Pros and Cons of Tiered Pricing: When Does It Work and When It Doesn’t?
Like other pricing models, tiered pricing has its pros and cons. Let’s delve into the essential ones so you can decide whether it could be a bullseye for your company.
Tiered Pricing Advantages
The advantages and benefits of tiered pricing encompass the following ones.
- Tiered pricing helps businesses increase revenue potential by appealing to both budget-conscious customers and those willing to pay for premium features – hence, it also facilitates building a broad customer base.
- This model ensures flexibility and scalability, as users can start with a lower-tier plan and upgrade as their needs grow.
- Businesses can use tiered pricing for market segmentation, tailoring different plans to various demographics and usage patterns.
- A well-structured pricing model can create a competitive edge, differentiating a brand by offering more personalized and accessible options.
- The structure naturally encourages upselling, as customers are incentivized to move to higher tiers with better features.
- Since customers can move between tiers instead of leaving altogether, tiered pricing helps with improved customer retention.
- It provides better cost justification, as users perceive more value by selecting a plan that matches their needs without feeling overcharged
Tiered Pricing Disadvantages
Now let’s reverse the coin to look through the main drawbacks of tiered pricing model.
- Sometimes it may create decision fatigue, as too many options may overwhelm potential customers and delay purchases.
- Customers may perceive hidden costs if lower-tier plans lack essential features, leading to frustration and dissatisfaction.
- Businesses risk alienating budget-conscious users if the entry-level tier is too limited or lacks real value.
- The model may lead to customer confusion, especially if the differences between tiers are not clearly communicated.
- Companies can face increased complexity in management, as maintaining multiple pricing structures requires ongoing updates and support.
- There’s a risk of cannibalization, where lower-tier plans attract customers who might have been willing to pay for a higher tier.
Tiered Pricing Examples
Now that you are familiar with tiered pricing benefits and drawbacks, we can get to the practice. Here are a few best applications across industries for your review.
1. Salesloft

Salesloft is a platform designed to streamline sales team efforts. It enables users to create workflows, automate outreach, and improve customer interactions. They offer two pricing tiers with hidden fees, but it’s surely a feature-based model. “Forecasting & Revenue Management” with built-in AI is what distinguishes both plans from each other.
UX Pro-Tip: While using a feature-based pricing strategy, make sure it’s clearly visible which features are distinctive (e.g. with comparison table and ticks).2. Surfer SEO

Surfer SEO is a true world star in the search engine optimization niche, offering tools for improving content, keyword research, creating topical maps and much more. They go with a hybrid pricing model with elements of subscription-based and usage-based tiering. The limits for usage (number of pages tracked, optimized articles, etc.) in the “Scale” plan are several times higher than in the “Essential plan”, while the price rises by just a little over double. A clever hack to nudge clients towards higher plans.
UX Pro-Tip: Steer user attention to the most profitable pricing tiers using labels (like Surfer’s “Best Value” and “5x higher limits”), arrows, bolds, and highlights.3. HubSpot

Renowned HubSpot’s Marketing Hub also offers mixed tiering based on the number of users and service usage thresholds as well. Note that they limited distractions and unnecessary elements to the minimum. A clean and simple design results in improved readability – it’s a no-go to overlook what is important.
UX Pro-Tip: Don’t overwhelm users with details right away. On the pricing page, above the fold, place only essential features, limits, and pricing options, while the detailed overview should be accessible below (you can also provide it as an expandable section).4. Kore.ai

Kore.ai is a leading provider of conversational AI solutions designed to enhance interactions between businesses and their customers, agents, and employees across various communication channels. They offer free feature-based plans and tiers with an emphasis on generative AI functions. Feature lists are abundant for each plan, which serves as a guarantee of product functionality and versatility as well.
UX Pro-Tip: If you offer free trials, instead of announcing it via labels, use buttons to enable immediate sign ups. They shorten the user journey and are hard to miss.Tiered Pricing: 10 Best Practices to Maximize Revenue and Reduce Churn
To make the most out of tiered pricing, you should follow a set of best practices. I’ve gathered the key guidelines into the checklist below.
1. Assign Each Tier a Distinct Value Proposition
To maximize the effectiveness of pricing tiers, ensure that each one offers a distinct value proposition. Customers should immediately understand what they gain at each level, making their decision-making process smoother. A well-defined tier structure also helps justify higher price points.
2. Reduce Number of Options
When setting up a tiered pricing model, it’s crucial to avoid overwhelming potential buyers. Simplifying options by limiting the number of tiers – typically to three or four – prevents decision paralysis. Too many choices can lead to indecision, ultimately lowering conversion rates. By the way, the same effect can result from a lack of clarity.
3. Align Tiers with Customer Segments
A successful tiered pricing strategy aligns with various customer segments (reflecting different personas), offering a balance between affordability and premium value. Entry-level users should see a clear path to upgrading, while power users should feel they’re getting exclusive benefits. Understanding different user needs ensures better retention.
4. Be Transparent About Features and Limitations
Transparency builds trust and encourages more confident purchasing decisions. It also prevents confusion and unnecessary hesitation. Be fair, give your clients a straightforward overview of what is included in each plan and what are the limits. Use bullet points to enable skimming with ease.
5. Highlight the Best-Value Plan
Go ahead and emphasize a popular plan (or the plan of your choice – e.g., one you consider the best in terms of marketing goals) as the default or “most recommended” option. This can create a psychological anchor, subtly steering users toward the best value plan. Highlighting one tier can also simplify the selection process for buyers who are not sure which option to opt for. Here is a perfect execution by ShipStation:

6. Use Data to Optimize Pricing Decisions
A data-backed pricing approach is a matter of professionalism. It maximizes your chances for long-term success. Use analytics and A/B testing to track conversions and engagement, draw conclusions and make data-driven tier adjustments. This iterative process will keep your pricing attractive while increasing profitability.
7. Encourage Upgrades with No Fluff
Encouraging users to move up the pricing ladder requires thoughtful strategy, especially if customer satisfaction is what you don’t want to sacrifice.
Your clients should feel potential upgrades are natural rather than forced. Limited-time discounts for upgrading or unlocking new features over time can incentivize higher-tier purchases. The smoother the transition, the higher the likelihood of conversion.
A good idea is to use listicles of features/benefits unavailable in lower plans. They show clients what they can gain through upgrades. Make sure to include as many items as it gets, provided they stay relevant. Don’t hesitate to emphasize the most impactful ones, like SalesHood does with AI features in the example below:

8. Don’t Neglect Entry-Level Plan
The lowest tier should be appealing enough to draw customers in (while providing just enough value to encourage upgrades). It acts as an entry point, allowing users to experience the product before committing to a higher-tier plan. Finding the right balance here is of great importance.
9. Offer Discounts and Promos
Strategically offering discounts and promotional pricing within tiered plans can boost conversions without undercutting perceived value. Temporary price reductions, bundle deals, or loyalty incentives can attract hesitant buyers and drive long-term customer engagement.
10. Regularly Review and Adjust Pricing
Finally, tiered pricing should never be static – to stay competitive within the market, regular adjustments are unavoidable. Analyzing industry trends, competitor pricing, and customer feedback helps fine-tune your pricing strategy over time.
How To Create Tiered Pricing?
You can do this in four ways, depending on your technical skills and what you sell:
- Custom solution (dedicated to advanced users / various applications). You can build custom pricing logic via API & backend. You’ll need Stripe, PayPal, or Braintree APIs to set dynamic pricing tiers, MySQL or Firebase database to store information, and role-based access control to manage features by tier.
- E-commerce or subscription platforms (suggested for non-pros / work for selling products). This way is pretty straightforward. Shopify, WooCommerce, BigCommerce, and similar platforms offer building pricing tiers with no code.
- Membership & subscription plugins (limited to WP environment / many possible use cases). In Wordpres or other CMSs, you can use plugins like MemberPress (for membership-based tiered pricing), WooCommerce Subscriptions (for recurring payments and pricing levels), or Restrict Content Pro (if access to certain features or content depends on the tier)
- Client portals (suitable both for newbies and pros / ideal option for selling services). Top-notch platforms of this kind, including Zendo, offer to create tiered pricing via fully customizable dashboards. No code or tech background is needed. Their key advantage over the other solutions is that in the span of minutes, you can integrate tiers with your service catalogs, forms, payment gateways, and much more. This way, you have all the essential features at your fingertips in one platform.

Final Words
Tiered pricing vs another type – if this was the dilemma that brought you here, I believe now you are at least one step closer to a decision.
If you finally decide to go tiered, step ahead and consider the tools you’ll need to turn your vision into reality. Ensure that a tool of your choice allows you to:
- sell services or products,
- connect payments,
- send quotes and invoices,
- and easily communicate with clients.
It’s also good to check whether its pricing creator allows you to:
- define billing cycles,
- set discounts,
- and select currencies.
If not, you’ll require numerous tools, which come with a price.
Hopefully, all of this (and much more) is included in Zendo’s forever “Free” plan. Sign in and unlock the power of one of the best client portals on the market.