Smart Pricing: Volume Pricing
What is a Volume Pricing Model?
With a volume pricing charge model, the price to be charged is based on the volume purchased. When setting up a volume charge model, a price table is used to define the pricing for each range of volumes, as well as the pricing rule to apply if the customer purchases a quantity that falls within the range of that tier. Each tier is defined by a starting unit, an ending unit, and a list price.
Unlike Tiered Pricing, where the product price of each unit may differ based on the unit range, in the case of Volume Pricing, all units of the product will cost the same.
For example, if the user purchases anywhere from 1-10 licenses, they will be charged per unit price of $10 (5 units x $10 per unit = $50) . However, if the user purchases anywhere from 11 – 20 units, they will be charged a per unit price of $9 (19 units x $9 per unit = $171).
Volume pricing models can be used with one-time, recurring, or usage charges.
Tiered vs Volume
- Tiered: Charge a different per unit price
- Volume: Charge a different per unit price, but the price per unit for all units is determined by the prevailing price based on the allocated quantity