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 customers’ ever-changing needs, now there are many, many types of discounts, each suiting a product category. Shopify Tiered discount, 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 engagement and retention. Let’s talk about this discount, its meaning, and some examples of tiered discount shopify bundles to help you understand the concept better.
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What Is a Tier Discount?
Tiered discounts provide customers with increasing discounts as they purchase more. The discount applies progressively, with higher savings for larger quantities.
Above everything else, a Shopify Tiered discount is 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 number of items they buy
- the total amount they spend
This strategy encourages bulk buying and rewards higher spending. 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.
Communicating and advertising why and how you’re implementing these discounts is important. By clearly communicating the benefits of purchasing in larger quantities, you can enhance customer satisfaction and boost sales. Tier discounts reward customers for their purchases and create a win-win situation where customers save money and businesses increase their revenue.
Further Reading: Best types of discounts
Benefits of Tiered Discounts
A tiered 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: Tiered discounts encourage customers to spend more time and money on your business. How? We can do this 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.
- Improved Customer Loyalty and Retention: By setting up tiered 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.
- Better Conversion Rates: Tiered discounts boost conversion rates by creating urgency and excitement. Shoppers are motivated to add more to their carts to unlock the next discount level, transforming browsing into action. The perceived value of higher savings encourages quicker decision-making, resulting in increased purchases and reduced cart abandonment rates.
- Enhanced Competitive Advantage: Tiered discounts give Shopify stores a competitive edge by offering dynamic savings, unlike flat discounts from competitors. This approach appeals to value-conscious shoppers, rewarding higher spending and fostering loyalty. By providing personalized incentives, stores can differentiate themselves, attract more customers, and encourage repeat purchases over one-time deals.
- Clear Customer Segmentation: A Tiered discount Shopify bundle enables clear customer segmentation by tailoring offers to different shopper groups. For instance, new customers can be enticed with low-commitment discounts, while repeat buyers can access higher savings for larger purchases. This strategy helps store owners identify, reward, and retain their most valuable customer segments effectively.
Types of Tiered Discounts
Tiered discounts come in various models, each catering to specific goals like increasing order size, rewarding loyalty, or creating urgency. Below are the most common types of tiered discounts:
- Volume-Based Tiered Discounts
These discounts are based on the quantity of items purchased. As customers buy more, they unlock higher discounts. For example:
- Buy 2 items, get 10% off
- Buy 5 items, get 20% off
This model incentivizes bulk purchases, making it ideal for stores with high-inventory items.
- Price-Based Tiered Discounts
In this model, discounts are tied to the total cart value, encouraging shoppers to spend more. Examples include:
- Spend $50, get 5% off
- Spend $100, get 15% off
This strategy boosts average order value and promotes higher spending.
- Customer Loyalty Tiers
Reward loyal customers with better discounts based on their purchase history or membership status. For instance:
- Regular customers: 10% off
- VIP customers: 20% off
This approach strengthens customer retention and builds long-term relationships.
- Time-Based Tiered Discounts
Offer tiered discounts during specific times or promotional periods to create urgency. For example:
- Exclusive 10% off for orders over $50 this weekend
- Buy 3, get 20% off during holiday sales
This strategy drives quick conversions and boosts sales during slow periods or special events.
How to Set Up Tiered Discounts on Shopify
Need a step by step guide for you to learn making tiered discounts on Shopify, there are two paths here.
1. Using Shopify’s Built-In Features
Shopify’s native “Discounts” tool is suitable for simple tiered discounts, such as volume-based or price-based discounts.
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- Log in to your Shopify admin panel.
- Navigate to Discounts in the sidebar.
- Click Create Discount and select the desired discount type:
- Buy X, Get Y for volume-based discounts.
- Automatic Discount for cart value-based discounts.
- Set the discount details:
- For volume discounts, specify the minimum quantity required and the discount percentage (To choose effective discount levels, analyze customer behavior and purchase data. For Shopify, set basic tiers; with third-party apps, customize tiers to target high-value customers and maximize conversions).
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- For price-based discounts, define the minimum cart value and discount percentage.
- Customize eligibility (e.g., all products, specific collections).
- Set an active duration for the discount.
- Save and test the discount in your store.
2. Using Third-Party Apps
For more advanced tiered pricing, apps (like Bold Discounts and Tiered Pricing Table) provide customizable solutions.
- Install the app from Shopify’s App Store.
- Configure tiered discount rules, such as quantity or price thresholds, and assign specific products.
- Enable features like discount stacking, loyalty tiers, or real-time discount displays.
- Preview and activate the discount.
By leveraging these tools, Shopify store owners can implement tiered discounts to increase sales and customer satisfaction.
Automatic vs. Manual Discounts
Automated tiered discounts save time, ensure accuracy, and apply seamlessly at checkout, making them ideal for scaling. However, Shopify’s native tools have limited customization, often requiring third-party apps for advanced features. On the other hand, manual tiered discounts offer greater control and flexibility for niche strategies but can be time-consuming and error-prone, especially with large inventories or frequent updates.
Marketing and Promoting Tiered Discounts
Effectively marketing tiered discounts requires a strategic approach to reach and engage your target audience. Use email campaigns to highlight the benefits of tiered pricing, encouraging customers to increase their order value for better savings. Display eye-catching banners on your store’s homepage or product pages to ensure the discount is visible to all visitors. Leverage social media platforms to announce time-sensitive offers, creating excitement and driving traffic to your store.
To maximize conversions, consider creating urgency with limited-time tiered discounts, especially during major sales events like Black Friday or Cyber Monday. Offering additional discounts for purchases made within a specific timeframe can prompt immediate action from customers.
Evaluating the Effectiveness of Tiered Discounts
When evaluating the effectiveness of tiered discounts, consider whether customers are motivated to buy more to unlock a better discount. Ensure that the discount structure is clear and easy to understand to avoid confusion. Monitor how the average order value (AOV) has changed since implementing tiered discounts—an increase here can indicate the success of the strategy. Additionally, assess whether there has been an increase in repeat customers or overall customer loyalty, which could suggest that your discount structure is encouraging long-term relationships.
Tracking key metrics is essential to evaluate tiered discounts. Focus on conversion rates, which reflect how well your discounts are driving sales. AOV is another critical metric, as it shows whether customers are spending more due to the tiered pricing structure. Finally, tracking customer retention and repeat purchase rates can help measure the long-term impact of your tiered discounts on loyalty and revenue growth.
Using Shopify Apps for Tiered Discounts
Several Shopify apps can help store owners set up, manage, and optimize tiered discounts to drive sales and improve customer engagement.
- Bold Discounts is a popular app offering advanced discount features, including customizable tiered pricing. It allows for flexible discount setups based on quantity, price, or customer segments, making it ideal for stores looking for comprehensive discount solutions.
- Tiered Pricing Table is another great option, offering an easy way to create and manage tiered pricing tables. This app enhances the visual appeal of discount structures, making it simpler for customers to understand and motivating them to increase their order for bigger savings.
- Quantity Breaks & Discounts is a powerful app for creating volume-based tiered discounts. It allows store owners to set up pricing rules based on the quantity of items purchased, helping to boost average order value and encourage bulk buying.
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.
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?
Final Thoughts
Fast Bundle is the ultimate Shopify bundle app, designed to automate and facilitate your Shopify store’s promotional strategy and maximize sales.
The app allows you to set up tiered discounts in different ways, 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!
