Setting revenue goals for your wholesale business is often hard, especially when you have customers with different needs and budgets. One of the best ways to solve this problem is by using a three tier pricing strategy. This pricing model lets you offer price levels, so both small and big buyers can get value from what you offer.
In this article, we will talk about how the three tier pricing strategy works, its benefits, and how you can use it to grow your wholesale business.
Let’s begin!
Tiered Pricing Explained
Tiered pricing offers different price levels based on how much a customer buys or the features they choose. This model helps businesses serve various customers, making it more attractive to both small and large buyers. Wholesale businesses often use tiered pricing to encourage customers to buy more by offering discounts or rewards for higher purchase amounts.
Over the years, the tiered pricing model is now more popular, especially for online businesses and stores. It is a good way to offer different choices for buyers who have different needs and budgets. With tiered pricing, businesses can set different price levels for various amounts, which helps increase sales and encourages bulk buying. This strategy helps companies to make more money while giving customers better value.
You can read more about tiered pricing here: How To Optimize Your WooCommerce Tiered Pricing Strategy.
What Is Three Tier Pricing Strategy? And How This Works
The three tier pricing strategy is a type of tiered pricing that has three different pricing levels for customers. These levels are made to appeal to different types of buyers. For example, a wholesale business could have three pricing tiers like this:
- Basic Tier: This tier is good for smaller buyers who need a small number of products. It might include small discounts, which makes it good for those just starting their inventory.
- Standard Tier: This is the middle option that offers better discounts and benefits, which is aimed at customers who want to buy in medium amounts.
- Premium Tier: This tier is for the largest buyers who want the most value by buying in bulk. It includes the biggest discounts and extra benefits.
In a wholesale setting, a business might use the three-tier pricing to get customers to buy more. For example, if a customer orders 50 units, they might get the basic tier pricing, but if they order 150 units, they could move to the premium level with bigger discounts. By offering these three levels, wholesale businesses can serve different kinds of customers while maximizing revenue.
Want to know more about pricing structures? You can read about: Tiered Pricing Structure (How To Optimize It In WooCommerce).
Examples Of Three Tier Pricing Strategy
To help you understand how the three tier pricing strategy is often used, here are three simple examples:
Scenario 1: Wholesale clothing store
Imagine a clothing store selling t-shirts in bulk. They could have three pricing tiers: 10-50 t-shirts at $5 each (Basic Tier), 51-100 t-shirts at $4 each (Standard Tier), and 101+ t-shirts at $3 each (Premium Tier). This makes customers want to order more so they can get a lower price per shirt.
Scenario 2: Office supplies wholesale
A supplier of office supplies could use tier pricing for their bulk orders of pens. For 100-500 pens, they charge $0.50 per pen, for 501-1,000 pens it is $0.45 per pen, and for orders over 1,000 pens, the price drops to $0.40 per pen. This tiered pricing strategy helps them sell more pens overall.
Scenario 3: Food distributor
A food distributor could use a three-tier pricing strategy for canned goods. For orders of 200-400 cans, the price is $1.50 per can, for 401-800 cans the price is $1.40 per can, and for orders over 800 cans, the price drops to $1.30 per can. This makes restaurants and other buyers want to buy more to get the best deal.
Read more about pricing examples here: Simple Tiered Pricing Examples And How To Use Them.
Benefits Of Applying Three Tier Pricing Strategy To Boost Revenue
There are many benefits of tiered pricing that can help increase your wholesale revenue. Here are five key benefits of using a three tier pricing strategy:
1. Increases customer choice
By offering three pricing levels, you give customers options that fit their budget and needs. This means that customers can choose the option that works best for them, whether they need a small number of products or want to buy in bulk. Giving them these choices makes it easier for them to make a purchase. It also helps attract different types of customers—those who are just starting as well as those who need larger quantities—because everyone can find a price that fits their situation.
2. Encourages larger orders
With rewards to move up to higher tiers, customers are encouraged to buy more to get better pricing. For example, if customers know they can save money by moving up to the next tier, they will be more likely to increase their order size. This leads to bigger sales and more revenue for your business.
Additionally, the perception of saving money motivates customers to buy more, which not only boosts sales but also helps to clear inventory faster. The more they buy, the better value they feel they are getting, which makes them want to purchase even more in the future.
3. Builds customer loyalty
Offering different options makes customers feel they are getting value, which leads to more satisfaction and loyalty. When customers feel that they have choices and can find the best deal for their needs, they are more likely to return and buy from you again. This helps build long-term relationships with your customers.
Moreover, the feeling of getting special pricing or discounts makes customers feel valued, which can turn them into repeat buyers. Happy customers are also more likely to recommend your business to others, which helps grow your customer base through positive word-of-mouth.
4. Simplifies decision-making
Customers find it easier to decide when they have three clear options, each with its own benefits. Having three tiers means that customers are not overwhelmed with too many choices, but still have enough options to find what they need.
When customers face too many options, they often experience decision fatigue and may abandon their purchase altogether. By simplifying the choices to three clear tiers, you help guide customers toward making a decision without stress, increasing the chance that they complete their purchase.
5. Boosts profit margins
By dividing your customers into groups, you can keep higher profit margins while offering discounts to those who buy in bulk. This means that you can make more profit from smaller buyers while still giving large buyers a good deal. It allows you to balance profit and customer satisfaction, which is key to growing your business.
This approach lets you set strategic price points for different customer segments, ensuring that each segment contributes positively to your overall profit. Small buyers help maintain profit margins, while larger buyers increase sales volume, creating a win-win situation for your business!
Maximize Your Wholesale Business With Wholesale Prices Premium
One of the best ways to use the three tier pricing strategy is by using Wholesale Prices Premium. This plugin allows you to set up tiered pricing for your wholesale store easily. You can create tiered pricing specifically for wholesale users, offering different prices based on the quantities they buy. This helps you cater to various customer needs and maximize sales.
For example, you can create your own pricing rules tailored to your customers’ needs. Based on their assigned roles, you have the flexibility to set specific percentage discounts as well as define the starting and ending quantities for the products they purchase.
Role-based: You can assign unique discount rates to wholesale roles like Bronze, Silver, and Gold. For instance:
- Bronze: 10–50 items = 10% discount
- Silver: 51–100 items = 30% discount
- Gold: 101+ items = 50% discount
Customizable ranges: You have full control to define the quantity brackets (starting and ending quantities) and set discounts accordingly. This means you can create pricing tiers that match your business goals and encourage larger orders.
Automation and accuracy: The system applies the appropriate discounts automatically at checkout, saving you time and ensuring your customers always get the correct pricing.
You also may read about setting up a pricing table here: How To Show WooCommerce Tiered Price Table (Full Guide).
Getting the most out of Wholesale Suite
Wholesale Prices Premium is part of a toolkit offered by Wholesale Suite, which is the #1 wholesale plugin in WooCommerce. It also includes other tools like Wholesale Order Form which helps customers place orders quickly and efficiently. Wholesale Lead Capture helps online stores acquire and manage potential wholesale customers. Lastly, Wholesale Payments makes it easier for you to manage payment options.
Together, these tools provide a complete solution for managing every aspect of your wholesale business. From customer acquisition to order processing and payment handling, they streamline operations, enhance efficiency, and ensure a seamless experience for both you and your customers.
Frequently Asked Questions
What is tier pricing?
Tier pricing is a pricing model where the cost per unit goes down as the quantity bought goes up. Businesses use it to encourage customers to buy more by offering discounts for higher amounts.
What 3 factors most commonly influence pricing strategy?
Pricing strategies are influenced by several factors, but the three most common ones are:
- Cost: The production or acquisition cost sets the baseline for pricing. A business must ensure their price covers costs while leaving room for profit.
- Customer demand: Understanding what customers are willing to pay based on the value they perceive is key to setting a competitive price. High-demand products can command premium pricing.
- Competition: Businesses must consider the prices set by competitors for similar products. Pricing too high might deter customers, while pricing too low can undermine profitability.
Balancing these factors helps businesses create pricing strategies that attract customers, remain competitive, and sustain profitability.
What is the psychology behind 3 tier pricing?
The psychology behind three-tier pricing is rooted in consumer decision-making and the concept of choice framing. Offering three pricing options (e.g., basic, standard, and premium) simplifies decision-making by presenting a clear structure.
- Anchoring effect: Customers often compare the three options and view the middle or premium choice as better value, avoiding the extremes of “too cheap” or “too expensive.”
- Perceived value: The premium tier subtly elevates the perceived value of the middle tier, making it more appealing to customers who seek balance.
- Choice simplification: Too many choices can overwhelm customers, leading to decision fatigue. With three options, customers feel empowered to choose without being overwhelmed.
This pricing strategy not only guides customer behavior but also increases the likelihood of upselling to the middle or premium option, ultimately boosting revenue.
Conclusion
The three tier pricing strategy is a great way for wholesale businesses to serve different customer needs, encourage larger purchases, and increase revenue.
In this article we discussed how the three tier pricing strategy works, its benefits, and how you can use it to grow your wholesale business.
- Tiered pricing overview
- Three pricing strategy definition and function
- Examples of three tier pricing strategy
- Benefits of three tier pricing strategy
- Maximizing Wholesale Prices Premium
By offering three pricing levels, businesses can create options that work for different types of buyers, and make it easier for customers to find the value that suits them best. Whether you are new to wholesale or want to grow your business, using a three tier pricing strategy can help you increase your revenue and give your customers a better shopping experience.
If you have any questions about setting up tiered pricing in your wholesale store, feel free to explore the tools provided by Wholesale Suite or leave your comments below!
