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Concepts

Tiered pricing rewards high-volume customers by lowering the unit cost for specific portions of their usage. This model ensures that as a customer’s consumption grows, they automatically access “bulk discounts” for the additional volume they send through the system.

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The logic of dimensions

Tiered pricing is a 1-Dimensional model. It depends on a single factor: Quantity (Dimension 1). Unlike a simple per-unit price, tiered pricing uses price brackets. You can think of this like a staircase: each step represents a “bucket” of usage with its own unique rate. As usage increases, it fills up the first bucket at the initial rate before “spilling over” into the next bucket at a lower rate.

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SaaS example: Cloud log storage

A monitoring platform charges based on the volume of logs ingested. In this graduated model, the bill is calculated by adding up the costs across each tier the customer reaches.
Usage (Dimension 1)Unit price
0 – 500 GB$2.00 / GB
501 – 2,000 GB$1.50 / GB
2,001+ GB$1.00 / GB
Scenario: 1,500 GB of Total Usage
Tier rangeUsage in tierUnit priceTier total
0 – 500 GB500 GB$2.00 / GB$1,000
501 – 2,000 GB1,000 GB$1.50 / GB$1,500
2,001+ GB0 GB$1.00 / GB$0
Total Bill1,500 GB—$2,500

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Get started: Configure your tiered product

This tutorial walks you through building a global tiered template in your Product Library.
  1. Navigate to the Library: Go to Contracts > Products. This is your central hub for defining reusable pricing blueprints.
  2. Create a Standalone Product: Click + CREATE NEWand choose Standalone Product from the dropdown. The Create Standalone Product page will appear. Fill in the required details and click Save & Proceed at the bottom right.
  3. Open Price Details: You will be redirected to the Price Details page. Click + Add Price to configure pricing for the product.
  4. Select Tiered Pricing Model: In the Pricing Model dropdown, select Tiered Pricing.
  5. Configure Tiers and Save: Click + Add Tier to create pricing brackets. Define the from and to ranges and enter the unit price for each tier. Continue adding tiers as needed. Once complete, click Save, then click Done on the Price Details page to finalize the setup.

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How-to: Add tiered product to a contract

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1. Via Contracts

  1. Open the target contract in Contracts > Contracts.
  2. In the Summary tab, click + ADD PRODUCT V3.
  3. Search for and select your configured tiered product.
  4. Review Brackets: Briefly confirm the price brackets match the customer’s specific agreement.
  5. Click ADD PRODUCT. You will be redirected to the Summary page. Click Publish.

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2. Via Customer

  1. Open the target customer in Customers.
  2. Go to Contracts and click + CREATE CONTRACT.
  3. In the Summary tab, click + ADD PRODUCT V3.
  4. Search for and select your configured tiered product.
  5. Click ADD PRODUCT. You will be redirected to the Summary page. Click Publish.

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Reference

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Technical specifications

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Tiered vs. volume pricing

Both models use usage brackets, but they calculate costs differently:
AspectTiered (Graduated)Volume
Calculation methodEach tier range billed at its respective rateAll units billed at the single rate of the tier reached
FormulaP = (r₁ × q₁) + (r₂ × q₂) + … + (rₙ × qₙ)P = rₙ × q
Cost progressionAlways increases with usageCan decrease if discount overcomes volume increase
Use caseReward incremental volume with progressive discountsApply bulk pricing to entire purchase
Example: 1,500 GB with same tier structure
TierRateTiered calculationVolume calculation
0–500 GB$2.00/GB500 GB × 2.00=2.00 = 1,000—
501–2,000 GB$1.50/GB1,000 GB × 1.50=1.50 = 1,5001,500 GB × 1.50=1.50 = 2,250
2,001+ GB$1.00/GB0 GB × 1.00=1.00 = 0—
Total$2,500$2,250

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Hierarchical relationship between entities

In Zenskar, the tiered pricing model is governed by a hierarchical relationship between entities:
  • Contract: The legal agreement between you and your customer.
  • Phase: A specific time-bound period (e.g., Q1, Implementation Phase) within that contract.
  • Product: The actual service or software module being sold.
  • Pricing model: The specific logic (tiered pricing) that defines how that product is billed.