Graduated vs volume pricing
Graduated pricing charges each band's rate for the units inside it; volume pricing charges every unit at the rate of the band the total lands in.
Graduated and volume pricing both use bands (tiers) of quantity with a rate per band, and produce very different invoices from the same bands. Graduated pricing charges each band’s rate only for the units inside that band, like income tax. Volume pricing finds the band the total lands in and charges every unit at that band’s rate.
A worked example
Bands: first 10,000 units at $0.01, everything above at $0.005. Usage: 12,000 units.
| Scheme | Calculation | Invoice |
|---|---|---|
| Graduated | 10,000 × $0.01 + 2,000 × $0.005 | $110 |
| Volume | 12,000 × $0.005 | $60 |
| Tiered (stairstep) | flat amount for the band 12,000 lands in | the band’s flat fee |
Volume pricing creates a cliff: at 10,001 units the whole bill drops. Graduated pricing is smooth, which is why most usage-based products use it.
Other schemes
- Per unit — one rate, no bands.
- Package — per started block: 1,001 units at “per 1,000” is two packages.
- Percentage — basis points of a monetary meter such as GMV.
- Per seat — a rate per seat per period, prorated to the day.
How Fynex does it
Fynex rates usage on all seven schemes and previews any configuration at up to 100 quantities on the same engine that bills, so the difference between graduated and volume is visible before a price is agreed. See usage-based billing.