Pricing Strategies
This article is part of a series on the payments module. Sometimes you may want to have products with bulk discounts - those products are defined by adding additional products as "tiers" to a main product which is called the "base price".
When you do this though, there are multiple ways that the actual price someone pays can be calculated, and we call these options pricing strategies. Note that the pricing strategy on the parent base item is the only one that is applied.
Standard Tiers
The standard tiers pricing strategy is the simplest strategy and also the default. If you're not sure, just stick with this one. Using the MinQuantity, it will select the tier that the purchase quantity fits in to. Then it will multiply that tier price by the whole purchase quantity.
The tiers are completely independent. You could have tier 1 start cheaper than where the base price ends for example - this is a common technique in marketing to create little incentive pits for people to buy a few more if they're near a price boundary.
Here's a sample product:
| Tier | Unit Price | MinQuantity |
|---|---|---|
| Base Price | £1.00 | 0 |
| 10% off for 3 or more | £0.90 | 3 |
| 15% off for 10 or more | £0.85 | 10 |
Here's how the prices are computed:
| Quantity | Established tier | Total Price |
|---|---|---|
| 1 | Base Price | £1.00 |
| 2 | Base Price | £2.00 |
| 3 | 10% off for 3 or more | £2.70 |
| 4 | 10% off for 3 or more | £3.60 |
| 5 | 10% off for 3 or more | £4.50 |
| 6 | 10% off for 3 or more | £5.40 |
| 7 | 10% off for 3 or more | £6.30 |
| 8 | 10% off for 3 or more | £7.20 |
| 9 | 10% off for 3 or more | £8.10 |
| 10 | 15% off for 10 or more | £8.50 |
Note that it is possible for this strategy to have quantities where it is cheaper or equal to buy 1 more. If the quantity is less than the base price minimum, it will check with your site wide ProductService settings if it should be rounded to the minimum, or error.
Step Once
Step once uses the standard tier pricing strategy except for on the base price. If the purchase quantity is in any of the tiers, the price will be based on the tier price and the excess quantity, plus the maximum number of items at the base price. The excess quantity is the purchase quantity minus the maximum number of items at the base price.
Here's a sample product:
| Tier | Price | MinQuantity |
|---|---|---|
| £10 for 1000GB | £0.01 | 1000 |
| 10p per GB overage | £0.10 | 1001 |
| 10% overage discount | £0.09 | 2000 |
Here's how the prices are computed:
| Quantity | Established tier | Total Price |
|---|---|---|
| 100 | Base Price (site rounded) | £10.00 |
| 500 | Base Price (site rounded) | £10.00 |
| 1000 | Base Price (site rounded) | £10.00 |
| 1001 | 10p per GB overage (excess 1) | £10.10 |
| 1500 | 10p per GB overage (excess 500) | £60.00 |
| 1999 | 10p per GB overage (excess 999) | £109.90 |
| 2000 | 10% overage discount (excess 1000) | £100 |
| 2500 | 10% overage discount (excess 1500) | £145 |
As it is using the standard tiers strategy for tiers 2 onwards, note that just like standard tiers this can also produce situations where it is cheaper to buy more which may be intentional. If the quantity is less than the base price minimum, it will check with your site wide ProductService settings if it should be rounded to the minimum, or error.
Step Always
Step Always exclusively uses stepping. The price is the sum of the maximum number of products from each tier passed, plus the excess quantity of the tier the purchase quantity falls in multiplied by the price from that tier.
Here's a sample product:
| Tier | Price | MinQuantity |
|---|---|---|
| £10 for 1000GB | £0.01 | 1000 |
| 10p per GB overage | £0.10 | 1001 |
| 10% overage discount | £0.09 | 2000 |
Here's how the prices are computed:
| Quantity | Established tier | Total Price |
|---|---|---|
| 100 | Base Price (site rounded) | £10.00 |
| 500 | Base Price (site rounded) | £10.00 |
| 1000 | Base Price (site rounded) | £10.00 |
| 1001 | 10p per GB overage (excess 1) | £10.10 |
| 1500 | 10p per GB overage (excess 500) | £60.00 |
| 1999 | 10p per GB overage (excess 999) | £109.90 |
| 2000 | 10% overage discount (excess 1) | £109.99 |
| 2500 | 10% overage discount (excess 501) | £154.99 |
Unlike either step once or standard, this never produces a situation where buying more is cheaper. The price curve is essentially continuous, because all "passed" tiers are factored in to the final price. If the quantity is less than the base price minimum, it will check with your site wide ProductService settings if it should be rounded to the minimum, or error.
