Jul 9, 2025
Discounts
Tiered Discounts vs. Fixed Discounts: Which Drives More Sales?
Andrey Gadashevich
CEO | Conversion expert
The e-commerce battlefield gets more crowded every day. A staggering 67% of shoppers now hunt for deals before making a purchase decision. That's not just a statistic; it's a wake-up call for Shopify merchants trying to stand out in a sea of competition.
Here's the million-dollar question: should you go with straightforward fixed discounts or the more sophisticated tiered discounts? This guide cuts through the confusion to help you make the right call for your unique business needs.
Understanding Discount Pricing Strategies for E-commerce
Discounts aren't just about slashing prices and hoping for the best. They're strategic tools that—when wielded correctly—can dramatically influence buying behavior, boost your average order value, and turn one-time shoppers into loyal fans.
What are the four different types of discount pricing?
E-commerce discount strategies typically fall into four main categories:
Percentage discounts: A reduction by a specific percentage (e.g., 20% off)
Tiered discounts: Escalating savings based on purchase volume or spending thresholds
Fixed amount discounts: A specific dollar amount off (e.g., $10 off)
Free products or services: Additional value without direct price reduction (e.g., BOGO offers)
The Impact of Discount Strategies on AOV and Conversion Rates
The numbers don't lie. According to Baymard Institute, a whopping 50% of shoppers abandon their carts because extra costs are too high. That's half your potential sales walking out the virtual door! Effective discount strategies directly combat this cart abandonment problem [Baymard Institute].
Get your discount strategy right, and you could see your average order value jump 10-30% while simultaneously watching more visitors convert to paying customers. Not too shabby for a few tweaks to your pricing approach.
What is a Tiered Discount?
Think of tiered discount as the "spend more, save more" approach. It's a progressive pricing structure where customers unlock better deals as they add more to their cart or reach specific spending thresholds. It's like a game where the prizes get better the longer you play.
McKinsey found that businesses implementing sophisticated tiered pricing strategies see profit increases of 2-7% on average [McKinsey].
How Tiered Discounts Work in Shopify
Setting up Shopify tiered discounts used to require coding wizardry or expensive developers. Not anymore. Apps like MBC Bundle Builder let you create sophisticated discount structures in minutes—no coding required. These systems automatically apply the right discount level based on what's in the customer's cart.
Common Tiered Discount Models
Volume-Based Tiered Discounts
Volume-based pricing rewards customers who buy more units:
Buy 1-5 items: Regular price
Buy 6-10 items: 10% off
Buy 11+ items: 15% off
This approach works wonders for encouraging bulk purchases, especially for consumables or items customers might stock up on. Think skincare products, pantry staples, or craft supplies.
Spending-Based Discounts
Spending-based discounts create clear incentives to reach specific cart value milestones:
Spend $50: Get 5% off
Spend $100: Get 10% off
Spend $150: Get 15% off
Ever notice how you suddenly need "just one more thing" when you're $10 away from free shipping? That's the psychological power of spending thresholds at work, driving up your average order value.
Customer Loyalty Tiers
Loyalty-based tiered pricing turns first-time buyers into repeat customers:
First-time customers: 5% off
Returning customers (2-5 purchases): 10% off
VIP customers (6+ purchases): 15% off and free shipping
This model doesn't just boost customer retention—it creates a sense of exclusivity and reward that keeps shoppers coming back for more.
What is a Fixed Discount?
A flat discount is exactly what it sounds like—the same reduction for everyone, regardless of how much they buy. It's the "what you see is what you get" approach to discounting.
Types of Fixed Discounts
Fixed discounts come in several flavors:
Percentage-based (e.g., 20% off everything)
Dollar amount (e.g., $15 off any purchase)
Free shipping (a fixed value benefit)
Buy one, get one (BOGO) offers
Implementing Fixed Discounts in Your Store
Shopify's built-in discount code functionality makes simple fixed discounts a breeze to set up. But for more complex offers like BOGO deals, you'll want specialized apps like MBC Bundle Builder that give you more control and flexibility.
What is the Difference Between Fixed and Tiered Pricing?
Pricing Structure Comparison
The key difference boils down to how discounts respond to customer behavior:
Fixed price: One consistent discount regardless of purchase size—like a flat 15% off everything
Tiered-based pricing: Escalating discounts that reward larger purchases—the more you buy, the better the deal gets
Fixed discounts are straightforward, but tiered approaches create that "just a little more" temptation that can significantly boost cart sizes.
What is the Difference Between Tiered and Flat Pricing?
Flat pricing (another name for fixed discounts) treats all qualifying purchases equally. Whether a customer buys one t-shirt or ten, they'll get the same 10% off each item.
Tiered pricing, on the other hand, creates discount "steps" that reward bigger purchases. This progressive discount structure gives customers a reason to add just one more item to their cart.
What is the Difference Between Tiered and Banded Pricing?
Banded pricing applies a single discount rate to the entire purchase once a threshold is reached. Hit the magic number of 10 items? Great—all 10 get that sweet 15% discount.
Tiered pricing is more nuanced, applying different discount rates to different portions of the purchase. The first 5 items might be regular price, while items 6-10 get 10% off, and anything beyond that gets 15% off. It's like having different discount zones within a single order.
What is the Difference Between Tiered Pricing and Volume Pricing?
Pricing Mechanics
These terms often get tossed around interchangeably, but there are subtle differences worth noting:
Volume pricing typically applies the same discount to all units once a threshold is reached
Tiered pricing often applies different discount rates to different "tiers" of the purchase
In volume discount tiers, buying 20 units might mean all 20 get a 15% discount. With strict tiered pricing, units 1-10 might get 5%, while units 11-20 get 15%. It's a more granular approach.
Value Proposition Differences
The messaging to customers also differs:
Volume pricing says "buy more to save more on everything"
Tiered pricing says "keep adding items for increasingly better deals"
Revenue Predictability
From a business perspective, tiered pricing often creates more predictable revenue patterns. Customers naturally gravitate toward spending thresholds, creating consistent purchase amounts. Volume pricing can sometimes lead to more erratic buying focused just on hitting minimum quantities.
Advantages of Tiered Discounts for Increasing Sales
Is Tiered Pricing Good?
Tiered pricing shines brightest for:
Products customers naturally buy in varying quantities
Businesses looking to pump up their average transaction size
Stores with repeat customers who can be incentivized to buy more
The results speak for themselves. That's serious money left on the table if you're sticking with basic fixed discounts.
Higher Average Order Value (AOV)
By creating clear incentives to reach the next discount tier, you're essentially giving customers a reason to add "just one more thing" to their cart. Data shows well-designed tiered discount systems can boost average order value by 15-25% compared to fixed discounts [Shopify]. That's a massive lift for a relatively simple pricing tweak.
Better Customer Retention & Loyalty
Tiered discounts can be structured to reward repeat purchases, creating a powerful customer retention engine. When customers see their discount level increase over time, they develop stronger brand loyalty. Why shop with a competitor when they'd be starting back at square one with lower discount tiers?
Increased Conversion Rates & Lower Cart Abandonment
Strategic tiered thresholds, especially when combined with progress indicators ("Add $15 more to unlock 15% off!"), can dramatically reduce cart abandonment. These visual cues create a compelling reason to complete the purchase rather than walking away. It's like turning checkout into a game where customers want to win by reaching the next level.
Benefits of Fixed Discounts
Simplicity and Clear Communication
The biggest advantage of flat discounts is their crystal-clear simplicity. Customers instantly understand "20% off everything" without doing mental math or calculating thresholds. This clarity is particularly valuable during high-traffic sales events like Black Friday or Cyber Monday when shoppers are making quick decisions.
Rapid Implementation
Need a quick sales boost? Fixed discounts are typically faster to set up than complex tiered systems. This makes them perfect for time-sensitive promotions, flash sales, or testing the waters with a new discount strategy.
Immediate Sales Impact
For quick inventory clearance or immediate revenue goals, fixed discounts often deliver faster results. Their straightforward nature drives quicker customer action—there's no "should I add more to reach the next tier?" deliberation that might delay purchases.
How to Choose Between Tiered and Fixed Discounts
Factors to Consider Based on Your Business Model
Your perfect discount strategy depends on several key factors:
Product type and price point
Customer purchase frequency
Profit margins and discount sustainability
Operational complexity and technical capabilities
Short-term vs. long-term business goals
When to Use Tiered Discounts
Lean toward tiered discounts when:
Boosting average order value is your primary goal
You sell products that naturally complement each other
Your customers typically make repeat purchases
You want to encourage bulk orders
Your profit margins can support escalating discounts
When to Use Fixed Discounts
Fixed discounts make more sense when:
You need customers to understand the offer instantly
You're after quick sales results
You're running a limited-time promotion
You're testing new discount strategies
You're focused on attracting first-time customers
Best Shopify Apps for Tiered Discounting
Several Shopify apps excel at implementing tiered discounts:
MBC Bundle Builder: Offers comprehensive tiered discount capabilities along with bundle builder, custom boxes, and quantity breaks features
Quantity X: Specializes in volume-based pricing structures
