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Contracts & Pricing

Tiered Pricing

Tiered pricing is a structure where the unit price changes according to the quantity purchased, with lower prices applying to higher volume bands.

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In a tiered model the supplier defines quantity bands — for example one price up to 100 units, a lower price from 101 to 500, and a lower one still above 500. Only the units within each band are charged at that band's rate, which rewards buyers for consolidating volume and helps suppliers secure larger orders.

Tiered pricing is closely linked to volume discounts and demand aggregation: buyers who combine requirements across departments or sites can reach a higher tier and cut their unit cost. Understanding the tier thresholds is key to buying at the most economical quantity without over-ordering stock that ties up working capital.

Frequently asked questions

What is tiered pricing?
Tiered pricing sets different unit prices for different quantity bands, with higher volumes attracting lower per-unit prices, rewarding buyers who consolidate their purchases.
What is the difference between tiered pricing and a volume discount?
A volume discount reduces the price once a threshold is met, often across the whole order. Tiered pricing applies specific rates to the units that fall within each defined quantity band.

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