Pricing Architecture: Good-Better-Best and Tiered Value Design

What “Good–Better–Best” (GBB) Pricing Architecture Actually Does

Pricing architecture is the deliberate design of a product lineup so customers can self-select the option that matches their needs and budget. A “Good–Better–Best” structure (also called three-tier or tiered value design) increases average order value (AOV) by making the mid and premium options feel like smart upgrades, while still protecting entry-level conversion with a credible, low-friction starting point.

GBB works because most shoppers don’t want the cheapest option; they want the option that feels “right.” Your job is to make “right” align with your profit goals by shaping the tiers, the value differences, and the price gaps.

Common outcomes when GBB is designed well

• Higher AOV: more customers choose the core tier, and some trade up to premium.
• Stable conversion: the entry tier remains a legitimate choice (not a “trap”).
• Lower decision friction: fewer scattered options; clearer comparison.
• Better merchandising: you can spotlight one tier as “Most Popular” without discounting.

Define the Roles of Each Tier (Entry, Core, Premium)

Start by assigning each tier a job. If you skip this step, you’ll end up with tiers that compete with each other or confuse customers.

1) Entry tier (the “starter”)

• Role: maximize conversion and customer acquisition while staying profitable.
• Customer mindset: “I want to try this with minimal risk.”
• Design rules: keep it simple, reduce choice overload, avoid too many add-ons baked in.
• What it should not be: a stripped-down version that feels unusable or dishonest.

2) Core tier (the “default best fit”)

• Role: capture the majority of buyers and deliver your healthiest blend of margin and volume.
• Customer mindset: “I want the best value for money.”
• Design rules: include the features/benefits most customers actually want; remove edge-case extras.
• Merchandising: this is typically the “Most Popular” option.

3) Premium tier (the “aspirational / maximum value”)

• Role: raise AOV and serve customers who want the best experience, best performance, or best convenience.
• Customer mindset: “I want the top option; I don’t want compromises.”
• Design rules: add meaningful, easy-to-explain value; avoid tiny incremental upgrades that feel like a cash grab.
• What it should do: make the core tier look like a smart deal by comparison (without making premium look overpriced).

Map Feature and Value Differences (So Tiers Don’t Cannibalize)

Tiering fails when differences are unclear or when the entry tier is “too good,” pulling customers away from core. To prevent this, map differences across a few value dimensions and keep the story consistent.

Use value dimensions that customers understand quickly

• Quantity: 1 unit vs 2-pack vs 4-pack; 30-day vs 90-day supply.
• Performance level: standard vs advanced materials; higher capacity; longer runtime.
• Convenience: faster shipping option, pre-assembled, ready-to-use kit, auto-replenish bundle.
• Completeness: base product vs product + essential accessories vs full kit.
• Personalization: standard vs custom fit/engraving/colorway.
• Service: standard support vs priority support; extended warranty.

Make differences “felt,” not just listed

Customers upgrade when the benefit is obvious. Translate features into outcomes.

Continue in our app.

You can listen to the audiobook with the screen off, receive a free certificate for this course, and also have access to 5,000 other free online courses.

Or continue reading below...

Download the app

Practical rule: choose 2–4 differences per tier

If you add 10 differences, customers stop comparing and start hesitating. Keep the comparison scannable.

Set Price Gaps Intentionally (Not by Guessing)

Price gaps (the differences between tiers) do most of the behavioral work in a tiered lineup. Your goal is to make the core tier feel like the best value, while keeping entry accessible and premium justifiable.

Three gap principles

• Principle A: The core tier should be an easy step up from entry. If the gap is too large, customers stick to entry. If it’s too small, you may be giving away value or leaving money on the table.
• Principle B: The premium tier should be a meaningful step up from core. Premium needs a clear “why” that matches the bigger price.
• Principle C: Each tier must be profitable on its own. Avoid relying on one tier to subsidize another unless you have a deliberate acquisition strategy and you can sustain it.

Use a simple gap framework to start

As a starting point for many ecommerce categories, you can test these relative gaps and adjust based on conversion data:

• Entry → Core: +25% to +60%
• Core → Premium: +40% to +100%

These are not universal rules; they’re a practical starting range for experiments. The right gap depends on how “real” the value jump feels and how price-sensitive your audience is.

Anchor the lineup around the core tier

Instead of pricing entry first, decide what you want the core tier to be (your default recommendation). Then design entry as a credible on-ramp and premium as an aspirational upgrade.

Check for “tier collision”

Tier collision happens when customers can’t see why one tier costs more, or when a higher tier is only slightly more expensive than a lower tier. Use this checklist:

• Can a customer explain the difference between tiers in one sentence?
• Does the core tier include at least one “must-have” benefit that entry lacks?
• Does premium include at least one “status/comfort/performance” benefit that core lacks?
• Would a rational buyer ever choose entry even if core exists? (They should.)
• Would a rational buyer ever choose premium? (They should.)

Variants vs Separate SKUs: How to Choose the Right Structure

Tiering can be implemented as variants on one product page (e.g., size/pack/warranty options) or as separate SKUs (distinct products/bundles). The right choice affects merchandising, inventory, and how clearly customers perceive differences.

When to use product variants (same product page)

• Differences are straightforward: size, color, pack count, warranty length.
• You want easy comparison: customers can switch tiers without leaving the page.
• You want shared reviews: one review pool can boost confidence.
• Inventory is tightly related: same base product with minor changes.

Watch out: too many variants can create a cluttered selector and reduce conversion. If your variant matrix becomes complex (e.g., 6 colors × 4 bundles × 3 warranties), consider simplifying or splitting.

When to use separate SKUs (separate products or bundles)

• The value story is different: “Starter Kit” vs “Pro Kit” vs “Ultimate Kit.”
• Bundling changes fulfillment: different components, packaging, or assembly.
• You need distinct merchandising: different hero images, different use cases, different positioning.
• You want clearer inventory control: each tier has its own stock and forecasting.

Watch out: separate SKUs can fragment reviews and split traffic. If you separate, use comparison tables and cross-links so shoppers can still evaluate tiers quickly.

Hybrid approach (often best)

Use separate SKUs for bundles/kits (entry/core/premium), and keep simple options (like color) as variants within each SKU. This keeps tiering clear while preserving a clean buying experience.

Design Patterns You Can Reuse

Pattern 1: Pack-size tiering (simple and effective)

• Entry: 1-pack (trial)
• Core: 2-pack (best value for most)
• Premium: 4-pack (best per-unit + convenience)

Pattern 2: Kit completeness tiering (reduces add-to-cart friction)

• Entry: base product only
• Core: base product + essential accessories
• Premium: full kit + premium accessory + extended warranty

Pattern 3: Service tiering (works well for higher-priced items)

• Entry: standard warranty/support
• Core: extended warranty or faster support
• Premium: priority support + extended warranty + setup help

Workshop: Draft Your Three-Tier Offer (With Target Margins)

In this workshop, you’ll draft an entry/core/premium lineup and assign target margins for each tier. The goal is to create a lineup where the core tier is the default choice, premium is compelling, and entry remains credible.

Step 1: Choose your “core customer” and core outcome

Fill in the blanks:

• Core customer: __________________________
• Primary job-to-be-done: “They want to __________________________”
• Core outcome promise: “Get __________________________ without __________________________”

Step 2: Define the three tiers by role (not by price yet)

Write a one-line definition for each tier:

• Entry: “Best for __________________________”
• Core: “Best for __________________________”
• Premium: “Best for __________________________”

Step 3: Map 2–4 value differences per tier

Use this table to ensure each tier has clear, scannable differentiation.

Step 4: Assign target margin by tier (your “guardrails”)

Set a target margin for each tier before finalizing prices. A common approach is to set a slightly lower target for entry (to protect conversion) and higher targets for core/premium (to lift blended margin).

• Entry target margin: ________%
• Core target margin: ________%
• Premium target margin: ________%

Now sanity-check your targets with the tier roles:

• If entry margin is too high, you may be overpricing the on-ramp.
• If core margin is lower than entry, your lineup may be upside down unless core has much higher costs.
• If premium margin is not the highest, premium may be under-monetized or over-built.

Step 5: Choose your implementation: variants or separate SKUs

Answer these questions:

• Are tier differences mostly pack size / simple options? If yes, lean toward variants.
• Do tiers require different components, packaging, or positioning? If yes, lean toward separate SKUs.
• Will too many combinations create a messy selector? If yes, simplify or split into separate SKUs.

Decision:

• Implementation choice: Variants / Separate SKUs / Hybrid
• Reason: __________________________

Step 6: Set initial price gaps (then refine)

Pick a starting gap plan and write your intended relative spacing:

• Entry → Core gap: ________% (target range: 25–60%)
• Core → Premium gap: ________% (target range: 40–100%)

Then write a one-sentence “why upgrade” message for each jump:

• Why upgrade to Core: “For just ________ more, you get __________________________.”
• Why upgrade to Premium: “For just ________ more, you get __________________________.”

Step 7: Build your comparison block (what the customer will see)

Draft a simple comparison table you can place on a product page or collection page.

Step 8: Quick stress tests (to protect entry conversion and lift AOV)

• Entry credibility test: Would you feel good recommending entry to a friend who is price-sensitive?
• Core gravity test: Does core include at least one benefit that makes it feel like the “complete” solution?
• Premium clarity test: Is premium’s value easy to explain in 5 seconds?
• Upgrade friction test: Are the upgrade steps simple (no complicated configuration)?

Mini Example (Template You Can Adapt)

Use this as a structural example (swap in your own product specifics):

• Entry: Single unit, standard materials, standard warranty. Best for first-time buyers.
• Core: 2-pack + essential accessory, improved convenience. Best overall value.
• Premium: 4-pack + premium accessory + extended warranty/priority support. Best for heavy users and gift buyers.

The key is not the exact contents; it’s the logic: entry removes risk, core completes the job, premium maximizes experience and convenience.