Tier Price
how to pass saving to your participants (only when certain minimums are met)
Tier pricing allows participants to unlock lower prices based on specific criteria set by the Trigger. However, participants must initially pay the full price, regardless of the current Tier price.When the Deal ends successfully, the tier price discount is refunded by adding a refund transaction to the Collab Wallet balance, as illustrated in the example below.
Certain stores provide different pricing options based on the quantity of items you purchase. In a group buy scenario, you have the opportunity to pass on savings to participants based on the quantity purchased, which can be for various reasons such as being a good friend, offering a competitive price, enticing more reservations with the hope of lower prices, or other motivations.
For instance, let's say you negotiate with a car dealer to get a discounted price of $30,000 each if at least 3 cars are bought, and $29,500 each if 4 or more cars are bought. In a traditional group buy, you cannot specify the price based on the number of cars purchased, which may not attract as many participants at the higher price of $30,000. However, offering the lower price of $29,500 in the hopes of more people joining is risky, as if the deal ends with only 3 purchases, your buying price may be higher ($30,000) than what your participants paid ($29,500).
To address this, you can use a Tier Price system, where the final price of the item depends on how the organizer has structured the tier pricing and how many items are bought when the deal ends. You can create up to 5 tier prices to offer different pricing tiers based on the quantity purchased.
The current tier price will be highlighted in the application, and participants need to pay the full price upfront to ensure they can afford it even if someone cancels, potentially causing the price to go back to the full price. When the deal ends and the tier price is achieved, the price difference between the original price and the tier price will be refunded as a privacy_tip Refund (System) Transaction.
However, to prevent abuse, Reservation cancellations that cause the Deal to go down a tier (Tier Step Down), for example from achieving the minimum deal requirement to not achieving it, or from achieving tier 3 to tier 2, will negatively impact the reputation of the person who cancels it. If the organizer cancels a Deal when there are other participants, the organizer's reputation will be negatively affected.
Note: you can always buy more than the required quantity, especially if buying a little more will enable you to get cheaper prices (using the next tier price).
This means that in certain scenarios, buying a larger quantity might result in a reduced overall cost.
This means that in certain scenarios, buying a larger quantity might result in a reduced overall cost.
For example, if you negotiate with a car dealer and agree on a lower price for each car if at least 3 cars are bought, and an even lower price if 4 or more cars are bought, your participants will initially pay the base price (e.g., $30,000 for car model #1 and $25,000 for car model #5). If the deal ends with the purchase of 4 cars, the organizer will owe the difference in prices ($500 for car model #1 and $200 for car model #5) to the participants who have paid. If participants haven't paid (i.e., they have a large credit limit), they will owe the total of tier 1 prices ($29,500 for car model #1 and $24,800 for car model #5).
The platform will record two transactions for each allocated participant. For example, for a participant reserving car model #1:
- privacy_tip Purchase (System) of $30,000 from the participant to the organizer when the participant's reservation is allocated.
- privacy_tip Refund (System) of $500 from the organizer to the participant when the deal ends.
If the deal is set up with a 10% deposit, participants will pay 10% of the base price (e.g., $3,000 for car model #1 and $2,500 for car model #5) upfront. If the deal ends with the purchase of 4 cars, participants will owe the tier 1 price. For example, for car model #1.
- For car model #1, the participant needs to pay $29,500. If the participant has already paid $3,000, the participant will need to pay $29,500 - $3,000 = $26,500 more.
- For car model #5, the participant needs to pay $24,800. If the participant has already paid $2,500, the participant will need to pay $24,800 - $2,500 = $22,300 more.
- privacy_tip Purchase (System) of $3,000 from the participant to the organizer when the participant's reservation is allocated.
- privacy_tip Purchase (System) of $26,500 from the participant to the organizer when the Deal ends.
As expected, regardless of whether a deposit is required or not, the buyer will ultimately pay the same total amount.
In most cases, the price of an item would not go up when you buy more of it. Therefore, a tier price for an item cannot be more expensive than the previous tier. While the next tier doesn't have to be cheaper than the previous tier, it can be the same or even cheaper for some items.
Having tier prices with the same price can be useful, for example: you can use tier prices as milestone goals, where participants receive a bonus item if a certain tier is achieved, similar to crowd funding campaigns or purchase additional items, such as buying one more machine for your business.
Having tier prices with the same price can be useful, for example: you can use tier prices as milestone goals, where participants receive a bonus item if a certain tier is achieved, similar to crowd funding campaigns or purchase additional items, such as buying one more machine for your business.
Always check if your tier prices make sense, especially if they still make sense if there is one more reservation after achieving tier prices 1, 2, 3, 4, or 5. For example, the price of 1 book is $10 if a minimum of 5 are bought, but the price of a box of 10 books is $80. It doesn't mean that the price after 10 books is $8, because if there is a demand for 11 books, you have to buy a box of books and a single book, making the average price $80 (1 box) + $10 (single) = $90/11 = $8.18, not $8.
