A pricing model is the "how" of pricing — the framework that decides what customers are paying for and how the charge scales. The price itself is an output. The model is the system that produces it.
The main pricing models
- Flat-rate — Every customer pays the same fixed amount. Simple to understand, leaves segmentation revenue on the table.
- Tiered — Multiple plans at different prices, each unlocking different features, capacity, or product mix.
- Usage-based — Customers pay per unit consumed (per delivery, per API call, per gigabyte). Strong alignment with value, harder to predict.
- Per-user / per-seat — Common in B2B SaaS. Scales with the size of the customer's team.
- Freemium — Free base tier, paid premium upgrades. Acquisition-heavy model.
- Value-based — Pricing tied to the customer outcome (% of revenue, % of savings). Hardest to implement, highest ceiling.
- Subscription / recurring — Customers pay a regular fee for ongoing access or delivery. The dominant model in modern commerce.
How to choose a pricing model
The right model depends on three questions. First, what does the customer perceive as the unit of value? If it is a delivery, charge per delivery (or per cycle). If it is access to features, charge per feature tier. If it is a result, charge per result. Second, how predictable is consumption? Highly variable consumption favors usage-based; stable consumption favors flat-rate or tiered. Third, who is your buyer? Consumer buyers want simplicity; B2B buyers tolerate (and sometimes prefer) complex usage-based models.
Subscription commerce defaults
For Shopify subscription stores, the dominant model is tiered subscription pricing — multiple frequency or pack-size options at different prices. The customer self-selects into the tier that matches their consumption. This captures more revenue than flat-rate without the complexity of true usage-based billing. See also subscription pricing models, tiered pricing, and value-based pricing.