When using graduated tiered pricing, what determines the charge for customers?

In graduated tiered pricing, the charge for customers is determined by the tier they fall into based on their usage. This pricing model is structured so that different ranges or "tiers" correspond to specific usage levels or quantities. For example, if a customer’s usage falls within a certain tier, they will be charged according to the pricing associated with that tier.

This approach is beneficial for both customers and providers as it allows customers to pay based on their actual usage while also incentivizing them to increase usage without a proportionate increase in costs at lower levels. The tiered structure means that as usage increases, customers may find themselves in a higher tier with a different pricing level, reflecting the value they receive from additional usage or services.

Understanding that the charge is based on the tier is crucial, as it clarifies how costs can fluctuate based on a customer’s engagement with the service or product, providing a clear incentive model that aligns with customer needs and behavior.