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.
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
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.