{"id":5858,"date":"2016-09-20T19:56:40","date_gmt":"2016-09-20T19:56:40","guid":{"rendered":"https:\/\/blog.growthtools.com\/?p=5858"},"modified":"2016-09-23T19:23:07","modified_gmt":"2016-09-23T19:23:07","slug":"tiered-pricing","status":"publish","type":"post","link":"https:\/\/blog.growthtools.com\/?p=5858","title":{"rendered":"How we used tiered pricing to quickly increase revenue 25%"},"content":{"rendered":"

There are 1,000s of marketing and sales strategies.<\/p>\n

You have no chance to ever try them all.<\/p>\n

But there is one sales strategy you can’t afford to overlook.<\/p>\n

Tiered pricing.<\/p>\n

Tiered pricing\u00a0has accounted for 25% of all of our revenue\u00a0over the last 18 months.<\/p>\n

If you are selling a\u00a0product or service online and aren’t using tiered pricing, stop whatever you are doing right now, read this article and implement it immediately. It’s one of the easiest tweaks\u00a0we’ve made to our sales process and has had the single most dramatic affect.<\/p>\n

The story:<\/strong><\/p>\n

About a year ago I wrote this post<\/a>, which outlined how we launched our first flagship product, Get 10,000 Subscribers<\/a>. It included all the data and numbers from the launch. If you haven’t read it, bookmark it. It’s solid.<\/p>\n

Here are the CliffsNotes…<\/p>\n

10ksubs first\u00a0launched in the spring of 2015. During that launch, we had two separate packages for customers to choose from.<\/p>\n

Here is what they contained:<\/p>\n

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Our customers bought the packages at a nearly identical rate.<\/p>\n

55% of students purchased the $1,200 high-end package, while 45% of students purchased the $600 low-end package.<\/p>\n

Funny thing is, I would have never known to look at these package splits had it not been for writing that launch recap post.<\/p>\n

And from my sales background, I knew three big\u00a0things about these numbers as soon as I saw them.<\/p>\n

Big Thing #1:<\/strong> I knew that, ideally, I didn\u2019t want more than 20% of our sales coming from our highest package.<\/p>\n

Big Thing #2:<\/strong> If more than 20% were buying that package, that meant it wasn’t priced high enough.<\/p>\n

Big Thing #3:<\/strong>\u00a0We were leaving a lot of money on the table by not giving people a way to pay us more money.<\/p>\n

I ended up making one tiny change with our second launch of 10ksubs\u00a0that brought in an extra $102,224 in revenue.<\/p>\n

I\u2019ll share what that one tiny change was in just a minute.<\/p>\n

But first\u2026 Let\u2019s talk about pricing tiers.<\/h1>\n

You\u2019ve likely seen examples of tiered pricing even if you didn\u2019t know what it was called.<\/p>\n

Tiered pricing is when you give your customers separate options for purchasing your product or service. For each separate \u201cpackage,\u201d more value is added and the price increases.<\/p>\n

For example…<\/p>\n

Imagine you are a sci-fi author who has just released a new book.<\/p>\n

You’re a hustler and know you need to pound the pavement to sell your book, so you set up a stand at a bookstore and sell 10 copies of your book at $10 each.<\/p>\n

10 books @ $10 each = $100 of revenue<\/p>\n

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The second day, you get smart and\u00a0decide to create a second package\u00a0to sell along with your\u00a0book.<\/p>\n

So instead of just selling books for $10 each, you offer two packages:<\/p>\n

Package A = The book for $10<\/p>\n

Package B = The book + a detailed map of the galaxies described in the book + audio book version + access to a cool membership community to discuss the book’s stories and characters for $50<\/p>\n

You still only make 10 sells that day, but this time, 6\u00a0of the 10 buy the book for $10 and 4 people buy the package for $50.
\n\"\"

You just increased revenue by 2.6 with one little bitty tweak.<\/p>\n

WOOT!<\/p>\n

But it gets better.<\/p>\n

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Because 40% of your\u00a0customers bought the\u00a0higher-end package, it shows that there is a sizable group of people that will pay you more money if you’ll only let them. (Remember the 20% rule?)<\/p>\n

So on the third day, you\u00a0add another package to the mix.<\/p>\n

For $1,000, a person can get all the super-cool stuff in the $50 package PLUS they get to spend the day with you\u00a0over lunch, discuss the book and ask questions about your\u00a0writing process.<\/p>\n

And what happens?<\/p>\n

You still only\u00a0make 10 sales, but this time 6\u00a0people buy the\u00a0book for $10, three people buy the\u00a0package for $50 and 1 person\u00a0buys the $1,000 lunch-outing package.<\/p>\n

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Now instead of making $50 per day, you’ve increased your revenue to $1,210 per day. And all you did was give people a way to pay you more money.<\/p>\n

If your mind isn’t swimming with ideas by now, check your pulse.<\/p>\n

Tiered pricing is freaking\u00a0amazing.<\/p>\n

It’s one of the simplest and most powerful knobs you can turn in your business to increase revenue.<\/p>\n

Checkout these 11 examples of tiered pricing in the real world<\/h1>\n

KingSumo<\/a> offers personal and developer licenses for their giveaway software plugin. You can use their plugin for one site for $198 or on unlimited sites for $594.<\/p>\n

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Shopify<\/a>, a software company that offers an e-commerce platform, sells three membership types for users wanting to start an online shop. Each tiered package level includes more services and integrations.<\/p>\n

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ThemesKingdom<\/a> is a great example of using tiered pricing for a digital product, that most just price as a one-time-purchase. The company creates WordPress website templates. By adding different tiers, customers have multiple options for purchasing the template and can choose one that best fits their needs.<\/p>\n

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 <\/p>\n

BuzzSumo<\/a> is an online search tool that tracks and ranks content from social sites (like Facebook, Twitter, etc.). To utilize their online tool, customers have three different pricing options. Each level specifies who would most benefit from that specific package.<\/p>\n

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