Tiered pricing with flat fee

Concepts

Tiered pricing with flat fee is a hybrid model designed for complex service agreements. In this model, every usage bracket (tier) carries its own fixed entry cost plus a variable rate for the units consumed within that specific bracket. It is highly effective for incentivizing growth while ensuring that each level of scale contributes a baseline of revenue.

The logic of dimensions

Tiered pricing with flat fee is a 1-dimensional model. It depends on a single factor: Quantity (q).

Think of this as "the toll road." Imagine driving on a highway where every new county you enter requires a fixed entrance toll (the flat fee) plus a small charge for every mile you drive within that specific county (the per-unit rate). Your total cost is the sum of all tolls and all miles across every county you have passed through.

SaaS example: Cloud log storage

A monitoring provider uses this model to bill for log ingestion. Each tier has a "base fee" for the infrastructure overhead of that bracket, plus a unit rate for the data stored.

Storage tiers (q)	Flat fee (c)	Price per unit (r)
0 – 100 GB	$50.00	$0.01
101 – 500 GB	$100.00	$0.08
501 – 1,000 GB	$250.00	$0.06

The "Toll road" calculation: If a customer stores 750 GB, Zenskar calculates the cost by totaling the flat fees and the variable usage across all applicable tiers.

Tier range	Quantity in tier	Flat fee (c)	Usage fee (r × q)	Total tier cost
0 – 100	100 GB	$50.00	$1.00	$51.00
101 – 500	400 GB	$100.00	$32.00	$132.00
501 – 750	250 GB	$250.00	$15.00	$265.00
Total	750 GB			$448.00

Get started

Create a tiered with flat fee product

Building the reusable blueprint in your product library.

Navigate to the Library: Go to Contracts > Products.
Create a Standalone Product: Click + CREATE NEW and choose Standalone Product from the dropdown. The Create Standalone Product page will appear. Fill in the required details and click Save & Proceed at the bottom right.
Open Price Details: You will be redirected to the Price Details page. Click + Add Price to configure pricing for the product.
Select Tiered pricing with flat fee Pricing Model: In the Pricing Model dropdown, select Tiered Pricing with flat fee.
Configure Tiers and Save: Click + Add Tier to create pricing brackets. Define the from and to ranges, enter the price and flat fee for each tier. Continue adding tiers as needed. Once complete, click Save, then click Done on the Price Details page to finalize the setup.

Add tiered with flat fee pricing to a contract

Applying the model to a specific customer agreement.

1. Via Contracts

Open the target contract in Contracts > Contracts.
In the Summary tab, click + ADD PRODUCT V3.
Search for and select your configured tiered with flat fee product.
Review Brackets: Briefly confirm the price brackets match the customer's specific agreement.
Click ADD PRODUCT. You will be redirected to the Summary page. Click Publish.

2. Via Customer

Open the target customer in Customers.
Go to Contracts and click + CREATE CONTRACT.
In the Summary tab, click + ADD PRODUCT V3.
Search for and select your configured tiered with flat fee product.
Click ADD PRODUCT. You will be redirected to the Summary page. Click Publish.

Reference

Technical specifications

Attribute	Specification
Dimensionality	1-dimensional (univariate)
Math formula	P = Σ (cᵢ + (rᵢ × qᵢ)) (where cᵢ is the tier flat fee, rᵢ is the tier rate, and qᵢ is the quantity in that tier)
Logic type	Piecewise linear function: The price is the sum of multiple linear segments, each with its own y-intercept (flat fee).
Boundary behavior	Lower-inclusive: A value exactly at a threshold belongs to the tier starting at that value.
Calculation engine	Graduated accumulation: The engine breaks the total quantity into buckets, resolves each bucket's fee and rate, and sums the results.
Data object	`pricing_model_type: tiered_flat_fee_pricing`

System architecture

In Zenskar, all pricing models are governed by a hierarchical relationship between entities:

Contract: The legal agreement between you and your customer.
Phase: A specific time-bound period (e.g., Q1, implementation phase) within that contract.
Product: The actual service or software module being sold.
Pricing model: The specific logic (tiered pricing with flat fee) that defines how that product is billed.

Entity hierarchy:

flowchart LR
    CONTRACT[Contract] ---|"has one or more"| PHASE[Phase]
    PHASE ---|"has one or more"| PRODUCT[Product]
    PRODUCT ---|"has exactly one active"| PRICINGMODEL[Pricing model]

style PRICINGMODEL fill:#90ee90

Price resolution flow

The following flow describes how tiered pricing with flat fee calculates the final price:

Product library: Defines the tiers, their flat fees (c), and their unit rates (r).
Contract: Links the product to a customer and defines the quantity source (q).
Data source: Provides the value of (either from a dynamic meter or static product field).
Billing engine: Allocates across the defined tiers, calculates the fixed and variable cost for each tier, and sums them to resolve .