Volume Pricing Guide: Examples, tools & tips

When working through a pricing model for your SaaS product, you should have a few big-picture goals in mind.

You have to balance reaching a wider customer base and expanding customer lifetime value. 

And if you can lower the risk of churn and create predictable revenue streams to set a solid financial foundation for your business—even better.

But every pricing decision you make has to center around the customer.

Volume pricing is a powerful strategy that can both delight your customers and align with your growth objectives.

But is adopting this "Buy more, save more" approach the right fit for your SaaS product? Let's find out.

What is volume pricing?

Volume pricing, or volume-based pricing, is a pricing structure where the cost per unit varies depending on the quantity of units purchased. The price per unit decreases as the quantity of the overall purchase increases. 

Consider a standard pricing structure — $20 per user per month for basic features, plus an extra $5 for premium features. 

Volume pricing introduces tiers that offer decreasing costs per user as the user count rises. For example, the first twenty users will cost one full price, the next batch of users will cost less, etc. 

The discount serves as an incentive for customers to purchase large quantities. This has a dual effect:

• From a sales perspective, volume pricing facilitates quicker inventory turnover and boosts sales figures.
• From the customer’s perspective, volume pricing rewards them for making bulk purchases and motivates them to buy more per order to capitalize on the reduced price.

Volume vs. tiered pricing

Volume-based pricing and tiered pricing are both usage-based models, but differ based on how each tier is priced.

Tiered pricing sets a unique price per unit for each specified range. Customers pay one price for the units in the first tier, then a different price for the units in the next tier, etc.

Volume pricing sets a single price per unit for all units based on the quantity purchased. As customers increase their purchase volume, they benefit from a consistently lower price per unit across all units (i.e., they pay one bulk price).

Under a volume pricing model:

• If the customer has 13 users, they pay the price for the 11-20 Users bucket, which costs $9 per user monthly. 
• In total, the customer pays 13 users x $9 = $117 a month.

Under a tiered pricing model:

• If the customer has 13 users, they pay a different price for each usage tier. 
• The first 5 users are in the 1-5 Users tier, so they pay $12 each, totaling $60. 
• The next 5 users fall in the 6-10 Users tier, costing $10 each, totaling $50. 
• The remaining 3 users belong to the 11-20 Users tier, costing $9 each, totaling $27.
• In total, this customer pays $60 + $50 + $27 = $137 a month.

Considering these scenarios, here are the main differences between volume-based pricing and tiered pricing:

• Focus: Volume pricing centers on the cost-quantity relationship, while tiered pricing creates distinct segments with varied features and pricing.
• Variability: Volume pricing tweaks per-unit prices according to the overall volume, whereas tiered pricing throws in variability with diverse features within each tier.
• Incentive: Volume pricing lowers per-unit costs with increasing volume, while tiered pricing encourages higher tiers by offering additional features as an incentive for customers.

5 SaaS volume pricing examples

Below, we've put the spotlight on some popular businesses that use the volume pricing strategy.

1. Chargebee

In addition to standard feature tiers, subscription billing software Chargebee offers usage-based pricing based on how much you bill through its platform.

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2. Folderly

Here's what Folderly, an AI-powered SaaS platform to improve email deliverability, pricing looks like:

You can select one of five volume usage tiers, and Folderly will show you the monthly and annual costs for each mailbox. You can also choose the exact number of mailboxes you want in the next step.

3. ConvertKit

ConvertKit, an email service provider, customizes its pricing based on the number of subscribers.

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ConvertKit has three different volume tiers, each with a specific feature set. As your subscriber count increases and your requirements grow, your quantity discounts will scale accordingly.

4. EmailOctopus

EmailOctopus lets users tailor their plan according to the number of subscribers and emails they need. As the number of subscribers and emails increases, users get greater discounts, making the software a cost-effective solution for scaling email campaigns. 

5. Zapier

Zapier also offers usage-based pricing depending on the number of tasks you need to automate monthly.

When does volume pricing make sense?

Next, let's review circumstances when volume pricing makes sense.

Enterprise customers

Of course, larger enterprises require more licenses or user accounts. Offering a discounted rate for higher volumes incentivizes them to choose your SaaS solution in a competitive sale.

But it also incentivizes them to get more users into your product—increasing the likelihood of successful product adoption within their organization.

That’s a win-win for both sides: their team fully adopts your software and gets more value out of it; you get more seats filled, more revenue, and a stickier implementation within their organization.

Scalability 

Volume pricing is again a logical option when your SaaS product is designed to scale with the user's needs. 

Sometimes that means more users—as customers increase their usage or the number of users, they can benefit from a reduced cost per unit. This encourages them to scale their subscription with your service.

But other teams it means more usage. For example, consider a cloud-based storage SaaS. As companies grow and upload more data to the service, their storage needs grow. Volume pricing allows them to pay less per gigabyte as they scale up their usage, which means they'll likely stick around as their demands increase. 

You’re mutually incentivized to grow together.

Tiered plans

How can you provide customers the flexibility to choose a plan that aligns with their current needs and allows them to upgrade as requirements evolve? You implement tiered pricing based on usage or user count.

You can have tiered plans based on the number of contacts or leads—or a setup that makes the most sense for your business. Customers can start with a basic plan suitable for their current needs and upgrade to higher tiers as they expand their client base and need more features.

Value for users

This is super important: volume pricing should offer tangible value for users. 

Whether it's additional features, enhanced support, or a cost-saving benefit, customers should feel that opting for higher quantities and getting bulk discounts is the smart, money-savvy move to make. 

Take a marketing automation tool, for instance. You could offer higher-tier users additional features such as advanced analytics or personalized customer support. Like a buffet—they pay a bit more, but they get to load up their plate with all the good stuff.

Customer retention

Volume discounts also contribute to customer loyalty. If customers see cost savings as they scale operations, they are more likely to remain long-term users of your product.

Take an email marketing tool like MailChimp, for example. 

MailChimp adjusts its pricing based on the number of contacts. As your email list grows, you qualify for different pricing tiers with potential cost savings.

Don't these perceived savings make you less inclined to switch to a competitor and boost your loyalty?

Competitive positioning

Analyze your competitors' pricing strategies. If volume pricing is a common practice in your industry and well-received by customers, embracing it can help you stay competitive.

Let's say your fellow SaaS players in the HR software niche offer volume discount pricing, and users love the flexibility it brings. Jumping on that bandwagon keeps you in the competitive race and sends a signal that your pricing game is in sync with the industry playbook. 

It also makes your product stand out, making it easier for potential customers to size up the competition and choose yours with confidence.

How to implement volume pricing

You've likely already done the obvious—setting volume pricing tiers and ensuring it aligns with your business objectives and customer needs. 

But understand it's an ongoing dance—you must continuously monitor and adjust your pricing tiers. Consider customer feedback, market dynamics, and changes in your product offerings to stay competitive and maximize your profit margins. 

Once that's done, follow these steps to implement volume pricing. 

1. Use a subscription/billing tool that supports volume pricing

First thing’s first — you need a subscription/billing tool that lets you automate billing cycles and manage subscriptions. Bonus points if it can handle prorations and supports a variety of billing models, letting you experiment with different pricing strategies, whether it's tiered or usage-based.

Take Stripe, for example. With customizable tiers and the option to tweak unit ranges and costs for each tier, you can tailor your pricing to fit your needs. Plus, Stripe offers handy features like "volume" and "graduated" modes, so you can choose how pricing calculations are handled, just the way you like it.

Another solid option is Recurly. With support for tiered pricing and volume discounts, it's your go-to platform for managing subscriptions, fine-tuning pricing strategies, and handling recurring billing without any hassle. 

So, take your pick and let automated billing work its charm.

2. Create a transparent, clear pricing page

Add a volume pricing page on your website to show potential customers upfront volume pricing structures. 

This move simplifies the buying process for both customers and sales teams and cuts down on the back-and-forth negotiations, saving valuable time and resources—a boon in B2B transactions where bulk quantities are common.

Moreover, having a volume pricing page serves as proof of your products or services' scalability. Prospective clients can gauge the cost-effectiveness of scaling their purchases, prompting them to consider larger orders.

It shows your company's dedication to customer satisfaction, catering to diverse customer needs and nurturing long-term relationships, helping attract a wider customer base.

3. Get a CPQ software tool that supports volume pricing

Price quotes can get pretty wild with all the variables in the mix. Configure, Price, Quote (CPQ) and order form tools simplify the quoting process, ensuring efficiency and accuracy.

This is where Dock fits in. You can auto-generate quotes from your product library and quickly scale the quote up and down, providing a seamless experience for both sales reps and customers. 

Admins can set up pricing tiers in the backend, and when a sales rep opens their Dock workspace, they easily pull in those pre-set pricing tiers.

Dock also goes above and beyond by giving you user-friendly order forms. This extra layer of simplicity means reps can choose products, sort out billing frequencies, and specify contract terms with ease. 

It's as easy as ordering a pizza online—but for pricing proposals—fast and made to order.

By taking the headache out of complex calculations, Dock empowers sales reps to efficiently dish out product pricing info. This accelerates the quote turnaround, helping customers understand your pricing structure. Unlike those old-school sales proposal tools, Dock doesn't leave your sales team scratching their heads over volume pricing.

And here's the cool part—Dock keeps things real-time and collaborative. No more playing phone tag for the latest pricing info. With everyone on the same page, transparency and trust in the business relationship get a solid boost.

Check out a helpful video guide where our founder, Alex Krakov, shares the ropes on creating sales order forms using a volume pricing strategy on Dock.

Simplify volume pricing with Dock

Choosing the right pricing strategy can have a significant impact on not only your company's bottom line, but also your ability to grow your customer base. The best option will ultimately come down to the nature of your product or service and the type of customers you cater to. Volume pricing is a powerful tool that encourages growth while also rewarding customers for spending more. Sounds like a win-win, right? Like anything, it boils down to how its implemented.

Luckily, Dock's order forms let you bid goodbye to those head-spinning calculations by not only spitting out more accurate quotes but also ensuring a delightful user experience. Also, enjoy additional capabilities that make it easier to close deals and build trust with your customers.

‍Create your first 5 customer workspaces for free here.