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Tiered Quantity Pricing - Experience?

a subject I've never seen discussed here

5:39 pm on Feb 17, 2010 (gmt 0)

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1 blue widget - $10.00
2-6 blue widgets - $9.50
7+ blue widgets - $9.00

Anyone using tiered pricing? I see several advantages:
1) Helps get around MAP, if desired.
2) Allows flashing a lowball price such as "starts at $9.00."
3) Discourages uneconomic tiny orders. Rewards large buyers.

Of course, tiered pricing is more appropriate for some products than others. You probably wouldn't want a dozen of the same overcoat, but you may well buy 12 identical pairs of socks.

Did some research on the subject last night and saw almost none of our customers using it. Some used to. Perhaps they feel it's too complicated, too confusing.

Thoughts? Experience?
6:56 pm on Feb 17, 2010 (gmt 0)

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I have one client who does exactly this, and applies the quantity structure to the shipping costs as well. It's not a "huge" selling product, but it's one that multiple items are a definite advantage over just one. They love it, and respond that most of their orders result in 3 or more rather than just one.

For most of my customers though, the items are unique and it's rare you'd want more than two of any given item (one widget for each hand, for example.) When they do, they usually are only asking for a discount so they can re-sell it for more than the client does. :-P

This is where free gift/discount over X dollars boosts the sales total.
8:15 pm on Feb 19, 2010 (gmt 0)

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had it on one of my sites for years but took it down. you mentioned some of the pros, but there are cons too - page gets busy and some people get confused, also some people who only want 1 item feel like they are getting gouged when they see how much you are willing to discount higher quantities

when i went to fixed pricing, my top line was almost unchanged - but my average order size went down and my margin went up
9:09 pm on Feb 19, 2010 (gmt 0)

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How would it get around MAP. MAP prices are applied to each item, unless you are just talking about putting up smoke screens so it's less obvious.
11:01 pm on Feb 19, 2010 (gmt 0)

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Some products seem like naturals for tiered pricing... small electronic components and especially batteries. But I don't find sites using tiered pricing for batteries (yes one can buy larger packs of say 8 or 24 AA batteries). Almost any modern ready-made cart can handle tiered pricing. And the effectiveness of tiered pricing is a snap to chart in Google Analytics.

For the past 8 months, we've tested tiered pricing with just one product. Our average order size did not increase at first. But for the last 2 months the average quantity sold of that item has risen about 15%, offsetting the reduced margins, and SUGGESTING that tiered pricing MAY be the way to go, at least on some items. Of course, many dynamics affect sales over 8 months. We're going to throw a few more products into the test and make a final decision down the road.

BTW, no customer reported being confused by our three pricing tiers but it does slightly increase page clutter.

At this early point I doubt that tiered pricing will help much. Certainly major sellers like Amazon have tested it over the years and stuck with single unit pricing. If anything I see a trend away from tiered pricing in our field. And my own limited test was statistically inconclusive though deserving of some follow up.
9:22 pm on Feb 22, 2010 (gmt 0)

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I think this kind of question is contingent on your product and standard enduser. We were the first to have tiered pricing in our niche due to the overwhelming request for it - others website have followed, but not many. It's a great selling point, allows you to say "from $x" (without lowering prices to an unreasonable level), and gives incentive to buyers who WANT to give you money.

If you're primarily B2C, I'd imagine there might not be as much of a demand for tiered pricing - consumers want a widget, and they want it as cheap/fast as they can find. We have a healthy blend of B2C and B2B, and the B2B buyers are used to getting a good deal, special price, special service, etc. due to their size/company.

Tiered pricing costs comparitively little, helps streamline those orders, and we'll regularly get orders for 10-30x our average transaction from B2B buyers that don't even make a phone call, and don't cause customer service headaches b/c they can't figure out how to use 'the interwebs'. LOVE those orders.

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