First let me preface this post with the fact that I worked it out and I made enough money teaching last year to cover the cost of my gas to classes every night. I am not making a living at it. My tiered pricing is purely for the benefit of my students.
I run a dojo through a local Uni which used to have a fixed price. We trained twice a week for 2 hours each class at a price of $23cad a month (this is less than half of what the local dojos charge for one hour classes, more than reasonable by any standard). Since I teach at a university my students school schedules would often include evening classes and I kept losing students because they suddenly had an evening class interfering with one of our evenings. Even though our classes are so cheap that they were getting their money's worth with one evening a week they would stop altogether. So I introduced a one day a week option to allow those people to continue training. So you see my higher price is not an attempt to milk people for more money, my lower price is an attempt to better accomodate my students needs.
The same argument can be made for a school which has an advanced class, or a come whenever you want option versus an X classes a week option.
People are wired to not want to pay for something if they can't take full advantage of it no matter how good the deal is. So by offering tiered pricing you allow people to pay for what is right for them without feeing guilty that they are missing out on something they paid for.
Though it sounds capitalistic to draw the comparison, how would you feel if you only watched basic cable but had to pay the same amount as the person who watches every channel (even if it meant you could have all those channels you never watch), or if you only used you cell for 30 minutes a month and had to pay the same as the guy who spends all day everyday surfing the web on his smartphone phone.
I know that people are going to say that martial arts is not like the cable company, or the cell company but your students/customers don't see that. People are trained by the world we live in to want to customize what they are paying for to their own needs and when the martial arts virgin first walks into your dojo they have no sense of that tradition which everyone here touts so highly so you need to bend to that need.
At the risk of the ensuing McDojo references. If McDonalds only offered the Big Mac for sale people would never go there. Some folks want only a cheeseburger and some folks want the Big Mac, others want the full meal deal. BTW I still never go there because it all tastes like cardboard, that's why you still need quality.
It's a matter of economics and psychology.
Bring on the flame.