Concepts
What tiered pricing is
Tiered pricing is a pricing model where each bracket has its own rate, and usage is split across brackets so that each portion is charged at the rate for the bracket it falls into. Unlike volume pricing, the first units are never re-rated just because total usage grew large enough to reach a later bracket.
Brackets can still run in either direction: descending prices (standard, later units get progressively cheaper) or ascending prices (overage or penalty pricing, later units get progressively more expensive).
Tier boundaries
Tiered pricing always uses an inclusive tier boundary. Each boundary is the upper limit of a bracket, shown as ≤ in the range table, and there’s no toggle to switch it to exclusive the way there is for volume pricing. A boundary of 100 always means the bracket below it runs through 100, and the next bracket starts at 101.How accumulation differs by product type
Point in time (PIT) and period of time (POT) products both support tiered pricing, and the difference in how “quantity” is defined for each carries over here too, though the consequences are different from volume pricing.
For PIT products, usage accumulates across billing periods within a tier reset window, exactly as it does for volume pricing. The important difference is what happens when cumulative usage crosses a bracket boundary partway through that window: because each unit is billed according to its position in the cumulative sequence, units already billed in an earlier period keep the rate they were billed at. A later period only bills the newly consumed units, split across whichever brackets those units happen to fall into. Nothing already invoiced ever needs to be corrected.
For POT products, quantity is a snapshot, not a cumulative total, so there’s no accumulation to reset in the first place: a tier reset period simply isn’t a concept that applies here. Billing for a POT product works from whatever the quantity snapshot was at each point in time: when an amendment changes the quantity, that segment closes and a new one opens, each with its own fresh bracket split computed for its own quantity (10 seats at the first rate, the next 40 at the second rate, and so on). If quantity changes three times within a single billing period, that’s three segments, three separate tiered calculations, shown as three line items on the invoice. The segment before an amendment is never revised once a later one happens.
Tier reset period, explained
The tier reset period only exists for PIT: it’s the window over which cumulative usage builds up before returning to zero. It has no POT equivalent, since POT has no cumulative count to reset (see above).
The tier reset period must be a whole multiple of the quantity’s recurring cadence, and must align with the billing cadence so that a tier window never straddles an invoice boundary.
None of the scenarios above ever require correcting a prior invoice. Because each unit is billed once, at the bracket it fell into at the moment it was consumed, a later bracket crossing only changes the rate for units consumed after the crossing. Unlike volume pricing, it never revises the rate for units already billed.
Proration
Proration works differently depending on whether the product is PIT or POT, and which axis it applies to.
For POT, the bracket split is always determined by the full, un-prorated quantity active in that segment. The tiered amount is computed for that full quantity first, and only then scaled down for a partial period. For PIT, it’s the reverse in the prepaid case: the quantity grant itself shrinks for a partial period (or is charged in full, if partial period handling is set to full rather than the default prorate), and that quantity is what gets split across brackets.
How it interacts with other pricing features
Tiered pricing can be combined with other features, and the order they’re applied in matters. Raw usage is first floored by any minimum quantity commitment, then reduced by any quantity discount, and only that effective quantity is split across brackets to compute the amount. A minimum spend commitment is evaluated against that amount next, followed by any percentage or fixed discount. A quantity discount applied before the bracket split changes how much of the usage lands in each bracket, which can shift the blended rate the customer ends up paying, though it never produces the kind of large jump a price cliff creates in volume pricing. A minimum quantity commitment, if usage falls short of it, sets the floor used for the bracket split as well as the billing calculation, not just the final amount. The full calculation stack is laid out step by step in the reference section below.How-to guides
How to configure tiered pricing for a metered PIT product
- Open the price editor and set the pricing model to Tiered, with currency set to the currency you’re billing in.
- Add tiers as a list of upper bounds and rates, for example 0 up to 100 at 2.50, and 200 and above at $2.00. The last tier must be unbounded.
- Set the Tier Reset Period (for example, Monthly, matching the billing period, or a longer window like annual if usage should accumulate across billing periods).
- Leave Usage is metered checked and select the usage aggregate that supplies the quantity.
- Save. A customer using 150 units in a month is billed for the first 100 at 2.50: 100 × 2.50 = $425 for the month.
How to configure tiered pricing for a seat-based POT product
- Open the price editor and set the pricing model to Tiered, with currency set to the currency you’re billing in.
- Add tiers the same way as for a PIT product, for example 0 up to 100 seats at 2.50, and 200 and above at $2.00.
- Set the Pricing Period the tiered rate applies over, for example Monthly. There’s no tier reset period to set: quantity is a snapshot recalculated on each amendment, not an accumulating total.
- Leave Usage is metered unchecked if quantity is a fixed count you set directly rather than derived from usage events.
- Save. A customer holding 150 seats for the month is billed the same way as the PIT example: 100 × 2.50 = $425. If quantity changes mid-period through an amendment, that segment closes and a new one opens with a fresh bracket split for the new quantity, each shown as its own line item.
How to change tier boundaries or rates on an existing price
A pricing preset can’t be edited or removed once created, only added to. To change the bracket structure or any tier’s rate:- Create a new pricing preset on the product with the updated tiers.
- Mark the new preset as default if it should apply to new contracts going forward, or select it explicitly on the contracts that should use it.
- Contracts already referencing the previous preset keep billing against the tiers they were set up with.
How to read the tiered breakdown on an invoice
- Open the invoice and find the product’s line items. Each bracket that received any usage in the period appears as its own line item.
- For a PIT product with a tier reset period longer than the billing period, compare the cumulative quantity shown against the tier boundaries to confirm which units landed in which bracket.
- For a POT product, each amendment within the period produces its own set of line items, one per bracket touched by that segment’s quantity.
Reference
Bracket configuration
Tiers are configured as an ordered list, each entry specifying the upper bound of that tier (up_to) and the rate for units within it (unit_amount). The last tier’s up_to is unbounded (inf).
Validation rules
Input format: brackets are defined by end-point boundaries; each value is the upper limit of a bracket, and the last bracket must be unbounded. Tiered pricing has no inclusive or exclusive setting, boundaries are always the upper limit shown with ≤.