How to Increase Your Revenue With Tiered Product Offerings

Note: As an Etsy seller, pricing is at your sole discretion. This means that you are responsible for making your own pricing decisions and are free to set prices as you wish. That said, remember there are also legal considerations to be aware of around pricing and discounting. Sellers cannot mislead consumers on discounted prices. The original price must be a true price that was in practice for a substantial amount of time, so, for example, you can’t artificially increase a price and cut it down just to make it look like you’re running a sale.

“Suggestive selling” is a tried-and-true retail strategy used to encourage customers to add on complementary items before checking out, increasing the total value of their purchase. “A simple example of this occurs when you’re in line at the store,” says Rachel Refo, Merchandising Manager for Etsy’s Jewelry & Accessories category. “You’re surrounded by racks stocked with enticing items at lower price points, like travel-sized products or consumables.”

When selling online, offering free shipping with an order minimum can incentivize similar additions of lower-priced or bundled items before checkout. During a recent promotion, we learned that buyers on Etsy were 68% more likely to purchase multiple items from the same shop to meet a $35 order minimum to unlock free shipping.*

A tiered pricing strategy can make it easier to implement suggestive selling within your shop by showcasing inventory that helps shoppers easily identify add-on items to meet or exceed your free shipping threshold. Increasing their total order amount can help boost your overall revenue while recovering shipping costs, especially if many of the items in your shop inventory are priced under your free shipping minimum.

Read on to learn strategies for increasing your revenue with tiered product pricing, along with insights from the Etsy Merchandising team on popular add-on items across a variety of shopping categories.

Determine your average order value to inform your pricing tiers

Calculating your current average order value (AOV) is important in determining ideal price points for add-on items and product pairings. Highlighting product offerings at strategic prices can entice shoppers with complementary products and a free shipping offer while also increasing your shop’s revenue.

To calculate your current AOV on Etsy, download the CSV file of your orders and use the formula function of your spreadsheet to calculate the average of the total order amounts in the column labeled “Order Value.”

Appeal to shoppers with a range of price points

One way to conceptualize how tiered pricing can apply to your collection? Offer items below, within, and above the middle price range. This is your shop’s base range, mid range, or top range. Developing inventory that spans an array of prices opens your brand up to more potential customers—and makes it easier for engaged shoppers to identify products that complement the item that initially caught their eye.

Put varying price points into practice

For example, a moderately priced item (think of this as mid-range) for a jewelry seller might be a pendant necklace that’s listed at $29. A lower-priced item (think of this as the base range) in the same shop could be a simplified version of the pendant or a matching bracelet, and sell for $17, while a higher-priced item (think of this as top range) in the collection, like an elaborate statement necklace, would be priced at $49. With a free-shipping minimum of $35, customers are incentivized to purchase multiple items within the mid and base ranges in order to qualify for free shipping.

Find your pricing sweet spot

“Your mid-range items demonstrate your expertise as a maker or curator, and represent a median item price for your inventory,” says Rachel. “Items falling into the mid range of your collection are your sweet spot, where shoppers are buying most frequently.” Base-range items developed at lower price points can serve as an introduction to your brand, or be added on at checkout for shoppers who want free shipping. “Your top-range items can often serve as conversation starters or aspirational pieces,” Rachel explains. “Because they’re at the highest price point, they’ll generally sell at a lower rate than your base and mid-range items, but can generate buzz and showcase the extent of your brand’s expertise.” The prices of your top-range items can also increase the appeal of mid- and base-range products with lower price tags.

Bring it all together

The base- and top-range products you develop should also align your larger brand aesthetic and values, but can vary in areas like production complexity, material costs, product features, and size to reflect different price points and appeal to different types of customers. Custom order requests can often be a helpful source of inspiration. Take inspiration from the following suggestions from the Etsy Merchandising team to brainstorm products across a range of base-, mid-, and top-range price points.

Ideas for add-on items

If you’re offering a free shipping guarantee with a $35 minimum and have a current AOV under that threshold, think about how the price points of add-on items can help buyers bridge that gap with the incentive of free shipping.

Examples of popular add-on item ideas, as suggested by Etsy’s Merchandising team include:

Home and living: Smaller versions of mid-range items, like tea towels made from linen remnants, a travel-sized version of popular candle scents, greeting card versions of original prints or larger designs, cutting boards and trivets made from wood scraps, or smaller-scale ceramics pieces, like ring holders, bud vases, or soap dishes
Jewelry: Inexpensive earrings or simple chain bracelets; add-on charms for necklaces or bracelets; storage pouches; specialty cleaning solutions
Clothing: Buttons or enamel pins to complement clothing styles offered; branded tote bags
Craft supplies: Specialized storage and organizational options
Vintage: Smaller accessories like vintage keychains, hats, or jewelry that can help complete the look of larger mid-range items; branded tote bags

Offering bundles and sets

Creating bundled listings with complementary items can appeal to busy shoppers and build in the incentive of free shipping by exceeding your order minimum. Offering sets of common quantities of items within a single listing, like two pillowcases or three stacking rings, can be another effective way to appeal to shoppers.

Examples of popular bundles and sets include:

Home and living: Napkins, drinkware (like a set of mugs or glasses), serving sets, matching throw pillows, complementary artworks
Jewelry: Earrings and a matching necklace or bracelet, stackable set of bangles or rings, layering necklaces
Clothing: His and hers shirts, kid’s clothing item and an accessory (like a headband, hat, or glove)
Craft supplies: Starter sets for specific skills, techniques, or projects; seasonal or thematic bundles; kits by recipient (such as children, boyfriend or girlfriend, teacher)
Wedding: Wedding party kits (for bridesmaids and groomsmen, for example), bachelorette party kits, wedding favor bundles, signage and place-setting bundles
Vintage: Seasonal or thematic bundles (like a whimsical Christmas sweater and tie or a collection of vintage games) or home decor pairings (like a bundle of vintage picture frames)

Additional ways to increase your average order value

Custom options

Offering personalized details and embellishments like initials, birthstones, dates, or even significant coordinates can help add a special touch to a buyer’s purchase and increase the value of their order. Visit your listings manager to enable personalization options.

Gift wrapping

Appeal to shoppers who will have their order shipped directly to a gift recipient by offering additional packaging options, like a standalone gift wrap or greeting card listing. That way, buyers can ensure the recipient will have an extra-special experience as they unwrap their order while increasing the value of the order at checkout.

Free shipping

Offering free shipping can make your listings stand out from the competition in search results. Shoppers will see your free shipping offer on your listing in search results, and your listings will be included if a shopper uses the free shipping search filter. If you see an increase in orders coming from your free shipping sale, you can create a free shipping profile to make it part of your long-term marketing strategy.

*Based on an internal analysis of non-digital orders from May 2019.