Tiered Pricing

A pricing technique originating in manufacturing, where the per-unit price changes in steps based on quantity purchased, structured as a series of volume tranches (e.g., $10/user for 1–50, $8/user for 51–200). The "tiers" here are price bands on the same product, not different packages with different capabilities. Tranches can be defined in units or dollars. In software, tiered pricing is structurally suboptimal and a source of revenue leakage: the step changes at tranche boundaries create cliff-edge negotiation behavior (customers gaming the volume threshold, reps round-tripping through the next tier just to access the next discount), and the price held flat between thresholds means the vendor leaves margin on the table at every commitment that isn't exactly at a tier boundary. SPP's preferred alternative is a smooth pricing surface tuned against margin targets — the technique we call Margin-Calibrated Discounting.