Pricing & Promotions

Tiered Discount

Increasing discount percentages at higher spending thresholds.

1 min readLast updated Apr 2026

Increasing discount percentages at higher spending thresholds.

Why It Matters

Tiered discounts gamify spending by creating 'unlock' psychology. Customers add more to reach the next tier, increasing AOV 25-40%. The structure also rewards best customers with deepest discounts while protecting margin on smaller orders.

Practical Example

Scenario

A home goods brand implements: Spend $75 = 10% off, Spend $150 = 15% off, Spend $250 = 20% off.

Calculation

Before: $95 AOV. After: $128 AOV (customers stretch to hit $150 tier). Additional revenue: $33. Discount given: $19.20 (15%). Net gain: $13.80 per order

Result

AOV increases 35% while average discount is only 15%—the tier structure captures customers at multiple price points efficiently.

Pro Tips

  • 1Set first tier at 15-20% above current AOV for achievable stretch
  • 2Make each tier increase meaningful (5% jumps, not 2%)
  • 3Show progress bars in cart: 'Spend $23 more to save 15%!'
  • 4Test 3-tier vs 4-tier—more tiers can confuse or feel manipulative

Common Mistakes to Avoid

First tier too high—most customers can't reach it
Tier jumps too small (10%, 12%, 15%)—not motivating
Not clearly communicating tiers before checkout

Frequently Asked Questions

Related Terms

Bundle Pricing

Combining multiple products at a total price lower than purchasing individually.