There are a ton of sales strategies out there to help close deals. But my favorite of all sales strategies has to be the three-tiered pricing approach.

In this article, you’ll learn what three-tiered pricing is, why it’s important and some tips on how to implement it in order to get your deals closed more easily.

Note: This post was sponsored by Practice Ignition. Everything discussed is my honest opinion based on personal experience.

What is Three-Tiered Pricing?

Three-tiered pricing is a method of laying out three different solutions at three different price points.

So instead of showing prospects one level of service with one price, you show them three.

This works especially well with a productized service offering, where you bundle a variety of services and forms of value into a monthly fixed price subscription.

Like this example from Pilot:

tiered pricing pilot

Three-tiered pricing can be called a few other things, such as options pricing, Goldilocks pricing, the good-better-best approach or the gold-silver-bronze method.

Either way, all of these terms mean the same thing.

Now let’s look at why we would even implement this sales strategy in the first place.

The Truth About Sales

First off, in our profession, the word “selling” or sales” seems to be an ugly word.

It’s not.

Any business in the world sells something. So does your firm.

Second, in order to sell something, you need to understand what makes your target market tick. This is where understanding psychology is important.

Sales in accounting is not just about understanding your client’s business. It’s about understanding the people behind it and what’s in their brains.

You need to understand their pains, their challenges, and their ideal outcomes. This will also help you give an effective advisory or consultation service.

And from there, you can craft an offer that solves these problems and improves their situation.

Sales is essentially about performing a needs analysis on your prospective clients, understanding their situation and then communicating an offer.

All we are trying to do in sales is bridge the communication gap between what you offer and what your target market is looking for.

Easier said than done since it’s incredibly hard to get into your prospect’s heads.

This is where three-tiered pricing can help.

Why Implement Three-Tiered Pricing?

I think there are three main reasons why I’m a big fan of three-tiered pricing and they both have to do with how our brains are wired.

Avoids “Take it Or Leave It”

When you propose your services in a one option approach, it becomes a ‘take it or leave it” decision for your prospective client.

When you present multiple options, the thought-process for your prospect becomes much different.

It moves from “take it or leave it” to “which option do I like best”.

This changes the entire dynamic of the conversation that follows.

It also makes your sales process a much gentler approach and shows that you’re on their side to work with them to try and find something that suits them.

Hitting the Bulls-Eye is Impossible

When it comes to fixed pricing, how do you know the exact price someone is willing to pay?

How do you set the right price?

Well, you could read my guide to pricing accounting services to help you develop a price, but unfortunately, you’ll still never hit the nail on the head.

That’s because it’s impossible. You’ll never know exactly what someone is willing to pay.

Options pricing helps you get around this.

Instead of just showing one option at one price (which may or may not be the wrong price), you can show a range of prices.

The wider the range of price, the easier it will be to hit the “bulls-eye” to make sure that you can strike a deal that both parties are happy with.

You Can Often Land Clients at a Higher Price

With the right strategies (which I’ll touch on below), you can often land prospective clients on a higher-priced plan.

This has to do with the power of three options.

There’s something in our brains that likes three options compared to two options or four options, for example.

And when you lay out three options, studies show that 66% of people will select the middle option, 23% will select the low option while 11% will pick the high option.

By this logic, you can get 76% on options above your basic service level.

Why do you think even companies like Apple use this approach?

macbook three tiered pricing

It’s no wonder why this method is called the Goldilocks method: the middle option is just right.

How to Implement Three-Tiered Pricing

Here are a few tips & tricks to implementing a three-tiered pricing sales approach.

1) Creating Your Options

After you conduct a needs analysis of your prospective client, it’s time to put some options together.

Your basic option will be called your baseline option. This is the most basic service level that you want to offer which will be at a relatively low price compared to the other options.

Your top option will be your super-premium option and will dictate a high price.

And the middle option will sit nicely between the two and will be the option that offers the best middle ground.

2) Use Technology to Present Your Options

After you’ve put together your options, I highly recommend presenting these options via a call. In order to do so, you’ll need to use a good kind of accounting technology to present the options.

There are 3 alternatives that you could use:

Alternative 1 – A Virtual Whiteboard

Right now, an app called Miro is pretty popular to whiteboard all kinds of things. Which means you could whiteboard your three-tiered options to present to prospects.

Here’s a really simple one I just setup:

miro tiered pricing

When I ran my firm, I was using something similar to this, but as you can see, you’ll want to ensure that the design looks a bit better, which is the main problem with these kinds of apps. On top of that, it can take a bit of time to put them together for each client when it comes to editing and formatting.

Lastly, once you have someone that agrees to an option, you have to get the corresponding option into your proposal software, which duplicates your efforts.

That being said, due to the lack of available technology options that support three-tiered pricing, this is an option to consider.

Alternative 2 – Practice Ignition

I’ve been begging the Practice Ignition team for this feature ever since I became a user in 2013 and I’m so happy that it’s finally available in beta!

For those who don’t know, Practice Ignition is an app that helps you easily create proposals and engagement letters, automatically accept payments on accepted deals and automate the creation of workflows that follow (ex: creating invoices in your accounting system, deploying workflows for your tasks, etc.).

Before their tiered pricing feature became available, I was using a combination of alternative 1 above in combination with Practice Ignition.

Now, this process has become much easier.

When you’re creating your proposal in Practice Ignition, you’d start by including your pre-loaded services to create your Gold option, as I did here:

practice ignition tiered pricing

You’ll notice at the top right of the screen that there’s a button that says “Add Option”:

By clicking this, you can start adding your different tiered pricing options, as I have done here:

Once I create the options in Practice Ignition and follow the steps to complete the proposal, I’m able to preview what the client will see on their end to select the option they like best immediately after the options are presented:

Compared to alternative 1, this is way slicker and far more integrated. The implication, in my opinion, is more closed deals in less time.

Alternative 3 – Excel to PDF

I hate to even write this as an option but I do see some people handling options pricing in this fashion, mostly because:

  • It’s free
  • There’s been a lack of alternatives available

Basically, you create your 3 options in Excel, convert it to PDF and then present it to the client.

It’s not my favorite, but it’s an option.

3) Utilize Price Anchoring

Notice in the above examples how I showed the gold option first? Also notice how the price of the gold plan is significantly higher than the other two options?

There’s a reason for that and it’s called price anchoring.

There’s a bit of a shock value associated with immediately being hit with a high price. But after that, the prospect becomes desensitized to the price of the other two options, making it easier to close the deal.

Side note: In Practice Ignition, you can “star” your preferred option, which very likely would be your middle option, to show it as “preferred”.

4) Differentiation is Key

The key to options pricing is differentiation between your options. The more you can differentiate, the better.

And this takes a bit of creativity.

For instance, look at the support options I provide here:

In this simple example, the gold option is unlimited, the silver option provides limited Zoom access while the bronze option just provides some basic email access.

And there are other ways to differentiate.

I could say that the gold plan includes unlimited access to the entire team while the bronze plan included access to bookkeeper-level team members, for instance.

The more you can differentiate your tiers, the more powerful your three-tiered approach becomes.

5) Present Options Horizontally

The best way to present options is in a horizontal format. You can present them vertically, but it makes comparing options more difficult. The more friction you add to the process, the higher the chance you lose out on the deal.

And vice versa, the easier you make the sales process, the higher the chances of closing.

6) Try This Simple Phrase

After you present your options, ask the prospect this very simple question:

Which option do you want to start with?

Here, you’re basically asking your prospective client to make a decision. So rather than an “I’ll think about it” response, your prospect is actually going to tell you which option they like best to kick things into what’s hopefully an accepted proposal.

Over To You

Hopefully the above demonstrates why I think three-tiered pricing is so powerful and how you can implement it yourself.

If you’re not convinced about three-tiered pricing, you might want to check out what value pricing guru, Ron Baker, has to say about at 38:15 of this podcast episode.

I think the biggest takeaway of this article can be summarized in that sales and the entire process around it involves psychology and an understanding of the human brain. The more you understand this, the more deals you’ll be able to close. Three-tiered pricing is just one such strategy.

Ryan Lazanis

Hi! I'm Ryan. I’m an entrepreneurial CPA that founded Xen Accounting, a 100% cloud-based accounting firm, in 2013. Following its acquisition in 2018, I started Future Firm to help accountants fast-track the growth of a modern, scalable accounting firm of their own.

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