tiered pricing
Definition
Tiered pricing is a billing structure where the price per unit changes depending on how much a customer buys or uses. Businesses set up different price levels, called tiers, so that customers who buy more typically pay a lower rate per unit than customers who buy less.
Example
A software company might charge $10 per user for the first 10 users, then drop the price to $8 per user for users 11 through 50, rewarding larger customers with a better deal.
Watch Out
Make sure your contracts spell out exactly how the tiers are calculated, because ambiguous language about when a customer moves from one tier to the next can lead to billing disputes and angry customers.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.