Discounts are simple, aren’t they? You just set a lower price for the product and make a purchase a better experience for your customers. But there’s more to discounts than this!
Since the evolution of businesses and markets becoming more complicated to answer the ever-changing needs of customers, now there are many, many types of discounts, each suiting a product category. Tier discount, which is often called quantity discount (or quantity breaks) too, is versatile and popular in today’s ecommerce world especially for businesses in the Shopify app. These discounts benefit eCommerce and Shopify businesses by encouraging customers to buy more to reach higher discount levels, thus increasing average order value, boosting sales volume, and creating customer loyalty and retention. Let’s talk about tier discount, its meaning, and some examples to help you understand the concept better.
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What Is a Tier Discount?
Tier discounts are a strategic pricing model used by many eCommerce businesses, including those on Shopify, to incentivize larger purchases. This pricing model offers customers a volume discount based on two things:
- The quantity of items they buy
- the total amount they spend
For example, a store might provide a 5% discount if a customer spends over $100, and a 10% discount if they spend over $200. Just like this, the customer is encouraged to purchase more to unlock better savings, thereby increasing the average order value. Implementing tier discounts is simple with the help of various Shopify apps designed to manage and automate these discount levels.
It’s important to communicate and advertise why and how you’re implementing these discounts. By clearly communicating the benefits of purchasing in larger quantities, you can enhance customer satisfaction and boost sales. Tier discounts not only reward customers for their purchases but also create a win-win situation where customers save money, and businesses increase their revenue.
Further Reading: Best types of discounts
How Does Quantity Discount Benefit Your Business?
A tier discount will benefit your ecommerce or brick-and-mortar shop in various ways. The concept of getting more discounts by buying a higher amount is appealing on its own. Here are some extra ways that these discounts will help you:
A Higher Average Order Value
Tier discounts encourage customers to spend more time and money on your business. how? by offering them a bigger discount for purchasing in larger quantities. This increase in AOV can significantly boost your overall revenue. That’s why discounting can be considered a strategic pricing strategy too.
Repeat Purchases
By setting up tier discounts, you create an incentive for customers to return to your store for future purchases. Online buyers often remember the savings they received and the good experience they had in a store. This motivates them to return and get more discounts, especially if you use a Shopify app to manage these promotions seamlessly.
Simplified Inventory Management
Offering discounts, especially on bulk purchases can help you move inventory faster, reducing holding costs. When you need to clear out old or seasonal stock, a tier discount helps you make room for new products while rewarding customers with a discount code for bulk buying.
Customizable and Flexible
Setting up tier discounts is straightforward and customizable. You can easily adjust the discount rates, set minimum purchase amounts, and create a personalized, specific discount code for different tiers. This flexibility allows you to tailor the discounts to match your business goals and customer preferences. Using a Shopify app can also help you automate this process.
More Customer Satisfaction
Online customers love feeling like they are getting a good deal. Offering a volume discount through tiered pricing makes them feel valued and appreciated, enhancing their overall shopping experience. Satisfied customers often leave positive reviews and recommend your store to others, helping your reputation and sales.
Read More: A Complete Guide to Automatic Discounts
4 Tier Discount Examples
To better understand how tier discounts work, here are 4 detailed examples:
Sephora’s Beauty Insider
Sephora’s Beauty Insider Program features tiered discounts during special events. For instance, during their annual sale, Sephora offers 10% off for Insider members, 15% off for VIB members, and 20% off for Rouge members. This tiered discount structure not only rewards loyal customers with better savings but also incentivizes customers to reach higher membership levels for increased discounts.
Amazon Prime (Pantry)
Amazon Prime Pantry offers tiered discounts where customers can save more as they add more items to their cart. For instance, buying five or more items from the same category can unlock a 5% discount, while adding 10 or more items can increase the discount to 10%. This pricing model encourages bulk purchases and big shopping carts, and maximizes customer savings. Many people choose it for their household purchases.
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Staples Business Advantage
Staples (An Office Supplies Company) offers volume discounts to businesses through its “Staples Business Advantage” program. Customers purchasing office supplies in bulk can receive tiered discounts, with higher percentages off for larger orders. For example, spending over $500 might give a 5% discount, while spending over $1,000 could unlock a 10% discount. This encourages companies to consolidate their purchases, leading to greater savings.
Nike Membership
Nike’s online store occasionally offers tiered discounts to its members. For instance, during special promotions, members may receive a 10% discount on purchases over $100, a 15% discount for orders over $200, and a 20% discount for spending over $300. This tiered approach encourages customers to buy more items at once, enhancing their overall shopping experience with significant savings. Note that this discount is only available in “online stores’ and this encourages people to go on the website and provides great traffic for Nike too.
Read More: How can BOGO Discount escalate your business level?
Manage Volume and Tier Discounts with Fast Bundle
Fast Bundle is the ultimate Shopify bundle app, designed to automate and facilitate your Shopify store’s promotional strategy and maximize sales. Our app offers a powerful solution for creating various types of bundles, including mix-and-match, buy-one-get-one (BOGO), and, most importantly, tiered discount Shopify bundles.
The app allows you to set up volume discounts effortlessly, encouraging customers to purchase more to unlock better deals. With its user-friendly interface, you can easily customize bundle offers, set dynamic pricing rules, and provide seamless checkout experiences. Install it for your store and start the rest of your sales journey right now!
