Trapdoor In The Sun

Alan Shanahan, Technician & Consultant

Zuora Pricing: Tiered & Volume Pricing Explained

3 Comments

In the world of pricing, I have found that people tend to use the terms “volume pricing” and “tiered pricing” interchangeably. In the Zuora world, they have very specific meanings. The differences are subtle, but have a financial impact. So it’s important you understand what they both mean and make the right choices when setting up your product catalog.

I find that most things like this are best illustrated by example. Below, I will show both Volume and Tiered pricing setup for an item. The numbers on each line are identical, but the calculations arrive at different numbers.

Let’s assume a customer places an order of a quantity of 35 in both cases.

Volume Pricing:

01-10 = 100 per unit
11-20 =  90 per unit
21-30 =  80 per unit
31+   =  70 per unit

Cost Breakdown:
All units cost 70 each.

Calculation:
Total cost = 35 x 70 = 2450

Tiered Pricing:

01-10 = 100 per unit
11-20 =  90 per unit
21-30 =  80 per unit
31+   =  70 per unit

Cost Breakdown:
First  10 units cost 100 each 
Second 10 units cost  90 each
Third  10 units cost  80 each
Last    5 units cost  70 each

Calculation:
Total cost = (10 x 100) + (10 x 90) + (10 x 80) + (5 x 70) = 3050

As the examples above show, Volume and Tiered pricing are not always the same, especially in the Zuora world.

Author: Alan Shanahan

Cloud computing professional, amateur drummer and other things. Doesn't take himself too seriously. He's got a fever ... and the only prescription is more cowbell.

3 thoughts on “Zuora Pricing: Tiered & Volume Pricing Explained

  1. Alan a great example 🙂

  2. Pingback: Zuora Pricing: Tiered & Volume Pricing Explained | The Subscription Economy | Scoop.it

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