What are the best practices and examples of tiered pricing in your industry or niche?

1 Understand your customer segments

The first step to creating a tiered pricing strategy is to identify and understand your customer segments. You need to know who your target customers are, what problems they are trying to solve, what value they perceive from your solution, and how much they are willing to pay for it. You can use various methods to segment your customers, such as surveys, interviews, analytics, or behavioral data. The goal is to group your customers into distinct and meaningful segments based on their characteristics, needs, preferences, and behaviors.

2 Align your tiers with value drivers

The next step is to align your tiers with the value drivers of your customer segments. Value drivers are the features, benefits, or outcomes that your customers care about the most and are willing to pay for. You need to determine what value drivers are common across all segments, what value drivers are unique or important to specific segments, and what value drivers are irrelevant or undesirable to some segments. Then, you need to design your tiers to reflect these value drivers, and communicate them clearly and effectively. For example, if your value drivers are speed, quality, and customization, you can create tiers based on the delivery time, the quality level, and the customization options of your product or service.

3 Optimize your pricing and positioning

The final step is to optimize your pricing and positioning of your tiers. You need to set the prices of your tiers based on the value they deliver to your customer segments, the competitive landscape, and your business goals. You also need to position your tiers in a way that appeals to your customer segments, highlights the differences and benefits of each tier, and nudges them towards the optimal choice for them. For example, you can use anchoring, framing, or bundling techniques to influence your customer's perception and decision-making. You can also use trials, discounts, or incentives to encourage them to try or upgrade to a higher tier.

4 Examples of tiered pricing

Tiered pricing is widely used in various industries, such as software, media, education, fitness, and hospitality. Different businesses use tiered pricing to segment their customers and capture more value. For example, Netflix offers three tiers of streaming plans: Basic, Standard, and Premium. These tiers differ in the number of screens, video quality, and download options. They are aligned with the value drivers of customer segments such as convenience, quality, and flexibility. Similarly, Mailchimp offers four tiers of email marketing plans that differ in the number of contacts, features, and support. These are aligned with the value drivers of customer segments such as functionality, scalability, and reliability. Skillshare offers two tiers of online learning plans: Free and Premium. The free tier gives access to a limited number of classes while the premium tier gives unlimited access to all classes plus offline viewing and other perks. These are aligned with the value drivers of customer segments such as variety, quality, and convenience. Finally, Peloton offers two tiers of fitness plans: Digital and All-Access. The digital tier gives access to the app and classes while the all-access tier also provides access to a bike or tread. These are aligned with the value drivers of customer segments such as equipment, experience, and community.

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?