# Formula for tiered pricing (adding a quantity for tier) that includes a free tier

#### dw970906

##### New Member
I am trying to calculate the # of tiers required based on an inputted #. I am using a formula with MOD, but having issues getting the proper # of each tier due to the fact that I am including a "free" amount. I also need to chose the most appropriate tiers for cost effectiveness.

Tiers:
tier 1 = 500 units (\$0) This tier is ALWAYS included
tier 2 = 500 units (\$100 per unit)
tier 3 = 1000 units (\$80 per unit)
tier 4 = 5000 units (\$50 per unit)
tier 5 = 10000 units (\$20 per unit)

Example 1: 1000 units
- tier 1 will have quantity of 1 (500 units @ \$0/unit)
- tier 2 will have a quantity of 1 (500 units @\$100/unit = \$50,000)
Total cost - \$50,000

Example 2: 5000 units
- tier 1 will have a quantity of 1 (500 units @ \$0/unit)
- tier 2 will have quantity of 0
- tier 3 will have a quantity of 0
- tier 4 will have a quantity of 1 (5000 units @ \$50/unit)
Total cost is \$250,000)

In this example, it is cheaper to purchase 1 block of 5000 units (tier 4), vs purchasing 4, tier 3 blocks and 1 tier 2 block.

Any suggestions?

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#### etaf

##### Well-known Member
1000 , you use the 500 threshold, 1000-500
(500 units @\$100/unit = \$50,000)
BUT
Example 2
you use 5000 for tier 4 - But should that be 4500 at tier 4 , as you have 500 free and the 5000 brings it to tier 4 , but its only 4500 at the 5000 tier setting
- tier 4 will have a quantity of 1 (4500 units @ \$50/unit)

Also the 1000 example - should that use the 80 tier as its 1000

Last edited:

#### etaf

##### Well-known Member
does this work for you??
BUT I have assumed the threshold - is based on total volume as per your 2nd example and not with the 500 deducted
But thats a simple modification

Etaf - match values.xlsx
ABCDEFGH
2tier 100QtyTierAmount
3tier 25001004000
4tier 310008010008040000
5tier 4500050500050225000
6tier 51000020100000201990000
7000
Sheet2
Cell Formulas
RangeFormula
G3:G7G3=INDEX(\$C\$2:\$C\$8,MATCH(F3,\$B\$2:\$B\$8,1))
H3:H7H3=INDEX(\$C\$2:\$C\$8,MATCH(F3,\$B\$2:\$B\$8,1))*(F3-500)

#### dw970906

##### New Member
1000 , you use the 500 threshold, 1000-500
(500 units @\$100/unit = \$50,000)
BUT
Example 2
you use 5000 for tier 4 - But should that be 4500 at tier 4 , as you have 500 free and the 5000 brings it to tier 4 , but its only 4500 at the 5000 tier setting
- tier 4 will have a quantity of 1 (4500 units @ \$50/unit)

Also the 1000 example - should that use the 80 tier as its 1000
In the second example, you are correct, it would be 4500 units, but I will charge 1 unit of 5000. The total available units will be 5500 - I wouldn't bill again until above 5500.

#### dw970906

##### New Member

does this work for you??
BUT I have assumed the threshold - is based on total volume as per your 2nd example and not with the 500 deducted
But thats a simple modification

Etaf - match values.xlsx
ABCDEFGH
2tier 100QtyTierAmount
3tier 25001004000
4tier 310008010008040000
5tier 4500050500050225000
6tier 51000020100000201990000
7000
Sheet2
Cell Formulas
RangeFormula
G3:G7G3=INDEX(\$C\$2:\$C\$8,MATCH(F3,\$B\$2:\$B\$8,1))
H3:H7H3=INDEX(\$C\$2:\$C\$8,MATCH(F3,\$B\$2:\$B\$8,1))*(F3-500)

In the worksheet I want to use, I will need to automatically identify the # of tiers, based on my input value. I will then use that to calculate the overall price. How can I automatically identify the # of tiers needed without manually figuring it out?

#### dw970906

##### New Member
Now that I re-read my post, to clarify, I am not charging by unit, but by the # of tiers which the input #. So, in example 2, I will charge for 1 tier at 5000 units and the output price is 5000 * \$50. The important piece of this if to identify the # of tiers needed based on the input value, when considering the input value as I mentioned.

#### etaf

##### Well-known Member

Not sure i fully understand, SORRY

to get the tier than i added the lookup , based on my current understanding
Which is the qty - decides the tier to USE - but that value is only used for the qty less the free 500 items

Not sure what you would charge if the qty was less than 500

I dont fully understand
n the second example, you are correct, it would be 4500 units, but I will charge 1 unit of 5000. The total available units will be 5500 - I wouldn't bill again until above 5500.
As the 2nd example was 5000 not 5500 and the next tier is not until Tier 5

I have also put the spreadsheet onto a share - but with XL2BB you can copy into a spreadsheet
Anyway - you can try a few different Qty and see if works

Etaf - match values.xlsx
ABCDEFGHI
2tier 100QtyTier NameTier ValueAmount
3tier 250010040tier 100
4tier 31000801000tier 38040000
5tier 45000505000tier 450225000
6tier 51000020100000tier 5201990000
7800tier 210030000
8
Sheet2
Cell Formulas
RangeFormula
G3:G7G3=INDEX(\$A\$2:\$A\$8,MATCH(F3,\$B\$2:\$B\$8,1))
H3:H7H3=INDEX(\$C\$2:\$C\$8,MATCH(F3,\$B\$2:\$B\$8,1))
I3:I7I3=INDEX(\$C\$2:\$C\$8,MATCH(F3,\$B\$2:\$B\$8,1))*(F3-500)

#### dw970906

##### New Member
Thanks. I will take a look. Basically, I want to count how many of each tier needed and I need to know based on the inputted number, i.e. 2500, how many of each tier I would need (also optimizing for the best price per tier) in my example above.

I will only get the overall price by charging on the quantity of tiers (as I will have a list price per tier). Tier 1 (500) is no cost and needs to be included as a baseline. If the starting # is less than 500, then there is no cost to the tier, as this base tier is given free. Attached is a screen shot from my worksheet. So knowing the # of each tier is critical to my calculations.

#### Attachments

• Screen Shot 2021-03-05 at 2.39.55 PM.png
23.3 KB · Views: 3

#### dw970906

##### New Member
Like I said, the most important # for me is to understand how many of each tier I need and I will then use those amounts to multiple against the cost per tier to get my end price.

#### dw970906

##### New Member
Another example hopefully this clarifies. If I have 6000 units as my input, then I should have the following quantity of tiers:
tier 1 = 1 (500)
tier 2 = 2 (500)
tier 3 = 0
tier 4 = 1 (5000)
tier 5 = 0

The above is what I need to figure out for any arbitrary # I input. The I can easily figure out the cost as I have a static cost per tier. Tier 1 is always going to have a 1 as it is included for free. Hope this helps.

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