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If you’ve ever bought popcorn at the movies, you’ve experienced tiered pricing. The same goes for different soda sizes in fast foods or even SaaS pricing.

You know it – but have you ever used it?

Today, we’re talking about tiered pricing and how to use it to increase your revenue.

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What is tiered pricing?

As the name suggests, tiered pricing involves offering different levels of a product/service at increasing price points.

Here’s an example from Kit:

As with most SaaS platforms, the more features and the more usage you get, the higher the price.

But tiered pricing isn’t new, nor has it been invented by the tech world. Almost anything you buy, from groceries to designer bags, follows the same rule:

More = pricier (but cheaper per item).

“More”, however, has different definitions depending on industry and seller. It can be a matter of quantity but also a matter of how much access clients get.

We’ll dig into that later on.

First, a quick primer on why you should consider it.

The psychology of tiered pricing

Humans are emotion-driven creatures. We react to fear above everything else.

One of the most underrated fears is that of being backed into a corner, of having no choice — “this is your supper, eat it or starve to death”.

By offering your customers options, you make them feel safer and more comfortable.

In tiered pricing, there are several psychological effects at play:

1. The Anchoring Effect

Introducing a high-priced premium tier serves as a reference point, making other options appear more affordable. This tactic can guide customers toward mid-tier options, which often offer a favorable balance of value and cost.

Why do we seek a more favorable balance? Because of the Goldilocks Principle:

2. The Goldilocks Principle

By offering multiple tiers — such as basic, standard, and premium — you cater to your clients’ preference for a middle option that feels "just right", just like Goldilocks chose the little bears’ possessions.

Again, in most cases, people will default to the middle option.

3. Choice (Analysis) Paralysis

When presented with too many options, your clients’ minds will go into overdrive. They’ll contrast and compare their options until they’re too exhausted to make a decision, so they'll leave without buying.

This is analysis paralysis and the reason why you don’t see an endless number of choices on sales pages — typically three to four, with some exceptions for super complex tools, like Salesforce.

See how two of these effects are specifically designed to nudge people to choose the tier that is usually priced for maximum profitability?

Let’s unpack that.
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The Decoy Effect versus helpful tiered pricing

Say you’re faced with this choice at the movie theatre:

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​Image source​

You’re not particularly hungry but for 50 cents extra, the large serving seems like a bargain, so you (and most people) choose that over the middle one.

Here’s the thing: in food and hospitality, most pricing tiers are designed to nudge you toward the bigger, most expensive option.

This is decoy pricing at its finest. The middle option is the decoy, the one that makes you feel like you’ve “tricked them” and got a better bang for your buck.

Sorry to break it to you but the pricing was designed to make you feel that — and for the movie theatre to maximize their profits.

Which is why I hate the term “decoy pricing” with a passion.

Tiered pricing isn’t about squeezing your audience for every penny — it’s about giving them choices that match their needs and budgets.

✔ Tiered pricing: helps people find a product that fits their needs and budget.

❌ Decoy pricing: tricks people into paying more than they intended by making an option look artificially like a "better deal."

Luckily, as creators or small business owners, you have plenty of opportunities to create win-win pricing tiers — and they don’t all have to be about quantity.

How to implement tiered pricing in your business (with examples)

No matter what you sell, the most important thing about pricing tiers is making sure that the difference between tiers is crystal clear.

If there’s no obvious difference, you don’t need tiers, just name a price and be done with it.

SaaS and tech companies are the best examples here and what you can use as inspiration. Basecamp, for instance, even highlights the added benefits each new tier brings.

The pricing table format is also something you can borrow no matter what you sell. It’s something buyers are used to and a format that they can easily scan looking for the option that fits them best.

Let’s look at a few ideas depending on what you sell.

Do this if you sell services

If you sell services, you can usually create different pricing tiers for:

• Duration (one-offs, monthly commitments, year-long retainers, and so on)
• Volume (more deliverables)

Naturally, the more people buy, the bigger the discount they get.

This is a screenshot from my agency’s pricing page using the volume option.
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I created the tiers based on what our clients usually ask for volume-wise. Of course, there are personalized packages too, this table only serves to give potential clients a rough idea of what to expect.
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Do this if you sell digital products

In this case, you have more options. Your clients can pay extra for:

• Volume (i.e. one template versus a bundle of templates)
• More access to you
• Various extras (bonus templates, access to a community of peers, and so on).

For Audience Accelerator, for instance, I created three tiers, with various levels of access.

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They cater to DIY-ers (just the course and the worksheet), people who need a bit of help (the audit), and people who are very serious about growing their audience (the VIP option).

In full transparency, adding the extra two tiers was a test. I thought that maybe 1-2% of buyers would go for them.

To date, roughly 20% of them did. There’s a lesson here: people will always pay more for direct access to you or for personalized guidance.

Pro tip: this framework works well for almost any educational product. If you run a cohort-based program or a workshop, consider adding a premium/VIP option that includes 1:1 access to you.

Jay Clouse does a similar thing for The Lab, the community he runs.

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The three tiers are designed to offer different experiences for different client avatars, from the person who just wants to dip their toes to the one who wants his full support.

No matter what you sell, there is always an opportunity to add a premium or a low-end tier.

Heck, even for books, which used to be “the whole package” on their own. Louis Grenier does this masterfully for his recent book, Stand the F*ck Out (which I highly recommend in case you haven’t read it yet).

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Build your tiers one by one

Start with the core product — let’s say it’s a $200 course. You have two options:

• Consider the course the starting point and add 1-2 extra tiers that are pricier, the way I do for Audience Accelerator.
• Consider the course the standard/mid tier. You can then add a low-end tier, for instance, part of the course, just the templates, and so on.

Whatever you choose, make sure that:

• Every tier delivers on its promise and is valuable on its own. Don’t do “decoys”, you’ll just annoy people.
• You have both budget-conscious and high-spender clients.
• You can deliver all the tiers. If too many people buy the premium tier with direct access to you, you may end up with a fully booked calendar for months to come, which might paralyze your business.

🛑 Limitations and pitfalls

I said that there’s always an opportunity to add extra tiers to everything you sell and increase your revenue but that doesn’t mean you should always do it.

Like all marketing tactics, this one has its limitations too — some products are OK on their own, they don’t need extra tiers.

For example, my launch email sequence has no extra tiers. I could sell a consulting session along with it to help people with either implementation (but that’s not needed, because it’s super easy to use) or with email marketing in general. However, that would make for too big a difference between tiers.

Similarly, The Growth Intensive is a one-tier program, there's no cheaper option because there's no way to deliver a fully mapped strategy and content on a low-ticket offer.

Some more limitations you might stumble upon:

• Resist the urge to add too many tiers – you’ll send your audience straight into analysis paralysis. 2-4 is more than enough.
• The premium tier must deliver on its promise AND be rooted in your reputation. If you charge an extra $1,000 for a consulting session with you, make sure your reputation allows you to demand that.
• Low tiers might cannibalize your sales — budget-conscious buyers will never consider the mid-tier if you give everything away in the low-end one.

If you feel like your product or service isn’t right for tiered pricing, you can always increase your revenue by launching more offers. I wrote a primer on how to launch more frequently without burning out here.

Ask yourself these three questions before adding tiers to your core product:

1. Does each tier offer distinct, clear value?
2. Can I realistically deliver on all tiers without overloading myself?
3. Will adding tiers increase sales, or just add complexity?

Want to test this out? Pick one product and map out a 3-tier pricing structure. Reply and tell me what you came up with — I’d love to hear your take!​
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That's it from me today!

See you next week in your inbox.

Here to make you think,

Adriana

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