Tier Pricing in Magento ®: Increasing ROI With Less Profit

Increasing sales is one of the main goals of all web store owners. Let us review how to configure a discount for the number of products in Magento ® and why this is profitable for your business.

Tier Pricing: The more – the better

Many popular trade centers and web stores use a marketing decision called ‘pay less for more’. This is a very convenient and profitable system: customers see that the price will reduce if they buy two or more products and they are stimulated to buy more. If you believe you will not make a profit on that then read the counter-evidence below:

1. When a product price is formed it already includes not only tax expenses but the percent of the store profit, too. So, if you reduce the price by a few dollars you will not lose anything, but even gain more. Your sales will definitely increase;

2. New customers are attracted to your store;

3. You will have a lot of regular customers - this is how wholesale buyers work.

How to do that

Let’s say you want to set a lower price for a specific amount or weight of products. This is called Tier Pricing. You need to configure the price as, e.g. $3 for one or two products, $2,8 for 3 – 5 products, $2,5 for 6 and more products. This is very easy to configure.

Go to your Magento ® admin panel, then to Calatog – Manage Products. You will see a new page with all products and their settings. Locate the product you wish to modify and click on ‘Prices’. You need the option ‘Tier Price’. If you did not set this option before the field should be empty. Fill it with the necessary numbers.

If you have already used the Tier Pricing in Magento ®, you need to click on ‘Add Tier’ and create an additional layer of the price and quantity correspondingly. You only need to choose customers or customer groups to which that price will be applied.

Locate the field Qty and enter a minimal number of products necessary for the discount to be applied. In the field, Price set the cost for that number. Then save the changes and add another tier.

It is very convenient for you to set for whom that system will work. Let’s say you wish to run a promotional campaign that will offer a discount to regular customers. So, you will need to configure corresponding customer groups for your campaign and Tier Pricing rules for them.

Who can participate in the choice of price:

1. All visitors, even those not registered on your site;

2. Registered customers who are not logged into their account;

3. Visitors from ‘General’ group which contains all visitors who do not belong to any of your existing groups;

4. Other customers, e.g. from a privileged group. In order to create a group, go to Customers - Customer Groups in your admin panel. You can make special discounts for your business partners, wholesale customers, long-term customers, etc.

Once all customer groups are configured and saved, do not forget to check how the system works in your store. If you need any assistance, please feel free to contact us and we will do our best to help you resolve your issues.

GoMage specialists will help you to configure Tier Pricing in your Magento ® store. Please share your thoughts and experience of using this feature in your store and regarding possible types of customer groups, we might want to consider using.

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