Tiered usage pricing lets your customers move freely from lower value and usage tiers to higher value and usage tiers without restriction or penalty, through their own individual product consumption. Customer pricing is calculated by metering customer usage within each billing period. Tiered usage pricing enables a scaled pricing schedule that rewards your product's best customers, while incentivizing every customer to maximize their usage to attain the best possible per-unit price. Because it maximizes price flexibility and incentivizes customer usage and loyalty, it can often produce deeper customer commitments and engagement than simple usage-based pricing.
Uniform Pricing
With uniform pricing, all unit consumption is priced equally based on a single pricing tier, as determined by where the customer meter resides at the end of each billing period.
Uniform pricing lets customers dramatically lower their unit price by maximizing their recurring usage within each billing period. Uniform Pricing is a powerful tool for incentivizing customer consumption, while cultivating product loyalty and dependence.
In this example: Customer #1 consumed 260 units for the billing period, pricing each unit at $1.25 as indicated in Tier One.
Customer #2 consumed 744 units for the billing period, pricing each unit at $0.75 as indicated in Tier Two.
Customer #3 consumed 1,656 units for the billing period, pricing each unit at $0.50 as indicated in Tier Three.
Composite Pricing
With composite pricing, each unit is priced according to the actual pricing tier in which it was consumed.
With a composite pricing schedule crossing from usage tier to usage tier has less of a dramatic and immediate effect on the actual unit price. While the per-unit savings between tiers are less dramatic, composite pricing is still highly effective for incentivizing customers towards higher usage, as dramatic savings are realized based on the total usage, instead of the final usage tier.
In this example: Customer #1, #2 and #3 consumed the same number of units for the billing period as shown in the Uniform Pricing example above. With Composite Pricing the actual unit cost for each customer produces a smoother reward scale.