> ## Documentation Index
> Fetch the complete documentation index at: https://zenskar.com/docs/llms.txt
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# Tiered pricing model

## Tiered pricing model

The tiered pricing model is one of the [pricing models](/docs/20260301/pricing-models/concepts/pricing-models). This page explains how it calculates the amount of a pricing preset.

### Map of concepts

| Concept | Details |
| - | - |
| [Tiered pricing model](#tiered-pricing-model-a-price-for-each-tier) | The tiered pricing model splits the quantity across the tiers. Each part costs the price per unit of its tier. |
| [Point-in-time products](#point-in-time-products-the-count-continues-across-billing-periods) | If the product is a point-in-time product, the count continues across the billing periods of a tier-reset period. |
| [Period-of-time products](#period-of-time-products-tiers-for-each-quantity) | If the product is a period-of-time product, each quantity is split across the tiers from the first tier. The period ratio converts the amount to each billing period. |
| [Partial periods](#partial-periods) | If a billing period is only partly covered, the partial-period handling decides whether the amount is prorated. |
| [On-demand quantities](#on-demand-quantities-on-period-of-time-products) | If a period-of-time product uses the on-demand quantity strategy, each quantity is split across the tiers from the first tier and costs the full price in the billing period in which it occurs. |
| [Tiered pricing model on a line item](#tiered-pricing-model-on-a-line-item) | A line item can override the tiers and the pricing period or the tier-reset period. |

### Related modules

The following modules use the tiered pricing model:

| Module | Details |
| - | - |
| [Products](/docs/20260301/product-modules/products/concepts/products#pricing-presets-how-you-charge) | A pricing preset can use the tiered pricing model. For the steps, see [Set up the volume or tiered pricing model](/docs/20260301/product-modules/products/how-to-guides/pricing-presets#set-up-the-volume-or-tiered-pricing-model). For the fields, see [Volume and tiered fields](/docs/20260301/product-modules/products/reference/pricing-presets#volume-and-tiered-fields). |
| [Contracts](/docs/20260301/product-modules/contracts/concepts/line-items/pricing) | A line item calculates its charges with the tiered pricing model of its pricing preset, and can override its values. The billing of the line item decides the billing periods. See [Line item: billing](/docs/20260301/product-modules/contracts/concepts/line-items/billing). |

## Tiered pricing model: a price for each tier

The **tiered pricing model** is the [pricing model](/docs/20260301/product-modules/products/glossary#pricing-model) that charges each part of the quantity the price per unit of the tier that the part falls in.

The tiered pricing model has a list of [tiers](/docs/20260301/product-modules/products/glossary#tier), in **Tiered pricing**. For each period, Zenskar fills the tiers in order, from the first tier. The amount is the sum over the tiers:

```text theme={null}
amount = sum of (units in the tier × price per unit of the tier)
```

The following tiers give the following amounts:

| Tier | Range | Price per unit |
| - | - | - |
| 1 | 0 to 1,000 | \$0.10 |
| 2 | 1,000 to 10,000 | \$0.08 |
| 3 | Above 10,000 | \$0.05 |

| Quantity | Calculation | Amount |
| - | - | - |
| 800 | 800 × \$0.10 | \$80.00 |
| 1,500 | 1,000 × \$0.10 + 500 × \$0.08 | \$140.00 |
| 20,000 | 1,000 × \$0.10 + 9,000 × \$0.08 + 10,000 × \$0.05 | \$1,320.00 |

The amount always grows with the quantity. A unit that enters a higher tier changes only the price of that unit, not the price of the units before it.

The tiered pricing model always uses the [inclusive tier boundary](/docs/20260301/product-modules/products/glossary#inclusive-tier-boundary). The 1,000th unit belongs to the first tier, and the 1,001st unit to the second tier.

Zenskar keeps the full precision of the prices during the calculation. It rounds the amount to the currency at the end of the calculation of the [line item](/docs/20260301/product-modules/contracts/glossary#line-item).

For a comparison with the volume pricing model, see [Volume and tiered pricing models](/docs/20260301/pricing-models/concepts/volume#volume-and-tiered-pricing-models-one-tier-or-several).

## Point-in-time products: the count continues across billing periods

For a [point-in-time product](/docs/20260301/product-modules/products/glossary#point-in-time-product-type), the price per unit of a tier is the price of one unit, with no period attached. The [tier-reset period](/docs/20260301/product-modules/products/glossary#tier-reset-period) decides how long the count of units continues.

Within a tier-reset period, each [billing period](/docs/20260301/product-modules/contracts/glossary#billing-period) continues the count where the previous billing period stopped. Its units fill the tiers from that point. The amounts of earlier billing periods do not change.

With the tiers above, a quarterly tier-reset period, monthly billing, and 600 units in each month give the following amounts:

| Month | Units in the count | Calculation | Amount |
| - | - | - | - |
| January | 1 to 600 | 600 × \$0.10 | \$60.00 |
| February | 601 to 1,200 | 400 × \$0.10 + 200 × \$0.08 | \$56.00 |
| March | 1,201 to 1,800 | 600 × \$0.08 | \$48.00 |
| April | 1 to 600 | 600 × \$0.10 | \$60.00 |

The quarter costs \$164.00, the same as 1,800 units in one billing period. In April, the count starts again from 0.

When the tier-reset period equals the billing period, each billing period fills the tiers from the first tier.

## Period-of-time products: tiers for each quantity

For a [period-of-time product](/docs/20260301/product-modules/products/glossary#period-of-time-product-type), the price per unit of a tier covers one [pricing period](/docs/20260301/product-modules/products/glossary#pricing-period). For example, \$20 per seat per month. A pricing preset of a period-of-time product has no tier-reset period.

The quantity of a period-of-time product is a level that holds over time, such as a number of seats. Each quantity fills the tiers from the first tier. Quantities do not add up across billing periods. Zenskar converts the amount to each billing period with the [period ratio](/docs/20260301/product-modules/products/glossary#period-ratio):

```text theme={null}
amount = sum of (units in the tier × price per unit of the tier) × period ratio
```

The following tiers are prices per seat per month:

| Tier | Range | Price per unit |
| - | - | - |
| 1 | 0 to 10 | \$20 |
| 2 | Above 10 | \$15 |

| Seats | Calculation | Amount for a monthly billing period | Amount for a quarterly billing period |
| - | - | - | - |
| 8 | 8 × \$20 | \$160.00 | \$480.00 |
| 25 | 10 × \$20 + 15 × \$15 | \$425.00 | \$1,275.00 |

When the quantity changes partway through a billing period, each part of the billing period fills the tiers from the first tier with its own quantity. See [Partial periods](#partial-periods).

This section describes billing periods that the line item covers in full, with the [recurring quantity strategy](/docs/20260301/product-modules/products/glossary#recurring-quantity-strategy).

## Partial periods

The tiered pricing model handles partial billing periods in the same way as the per-unit pricing model. For a period-of-time product with the recurring quantity strategy, the [partial-period handling](/docs/20260301/product-modules/products/glossary#partial-period-handling) of the line item decides whether a partial part of a billing period is prorated by days or charged in full. The tiers are filled first, and the proration applies to the amount. See [Partial periods](/docs/20260301/pricing-models/concepts/per-unit#partial-periods) on the per-unit page.

For a point-in-time product, the pricing model does not prorate.

## On-demand quantities on period-of-time products

With the [on-demand quantity strategy](/docs/20260301/product-modules/products/glossary#on-demand-quantity-strategy), a quantity is a purchase at one point in time. For a period-of-time product, the on-demand quantity of a billing period fills the tiers from the first tier. Zenskar charges the full prices of the tiers, in the billing period of the purchase:

```text theme={null}
amount = sum of (units in the tier × price per unit of the tier)
```

The period ratio and the partial-period handling do not apply. The amount is not spread over later billing periods.

## Tiered pricing model on a line item

A line item calculates its charges with the tiered pricing model of its pricing preset. A [price override](/docs/20260301/product-modules/contracts/glossary#price-override) on the line item can change the tiers, and the pricing period or the tier-reset period. The pricing model stays tiered. The calculations on this page then use the overridden values. See [Line item: pricing](/docs/20260301/product-modules/contracts/concepts/line-items/pricing).


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