Specifically, tier is the capacity to own land on the public Linden estate (AKA "the Mainland"). If you're planning to purchase land on a privately owned estate, the tier for that is being paid for by the estate owner, and you'll be making any payment arrangements with them. To purchase land on someone's private estate, you do not need a premium account or to pay Linden Lab any tier fees.
Private estates are a special case outside of the tier system. It's when we look at the Mainland that you need to know about tier.
Basic accounts cannot hold any tier, and thus cannot own any Mainland parcels. That's a simple given. If you have a Basic account, you may still rent land from another user (by coming to some financial arrangement or other agreement), or make use of land as a part of a group.
Checklist – What you need:
A Premium account.
A little arithmetic.
Premium accounts (paid for monthly, quarterly or annually) automatically have the capacity to own up to 512 square metres (which we'll call sqm after this. You'll also commonly see it called m2, m2 or sq.m) of land, and may lease additional capacity from Linden Lab, in a series of steps – called tiers. One sqm is a square one metre by one metre, and is close enough to one square yard if you're still on the old British Imperial units rather than metric.
The very first tier is $0 USD. That gives you the starting capacity of 512sqm for having a premium account. It might seem a little odd that the first tier is called 0 sqm. That's because the tier steps are in addition to the 512sqm you get for your Premium account. So, along with your payment for a premium account, you get the capacity to own 512sqm of land, and pay no more per month for it.
That doesn't actually grant you the land itself, however, just the license to own up to that amount. We'll get to that in a minute.
The next tier, over and above the starting 512sqm capacity for a Premium account is 512sqm, and costs an additional $5USD per month – that gives you a total ownership capacity of 1024sqm. The next tier is 1024 and the area keeps doubling up to 65,536sqm (that's one full sim).
The costs for successively higher tiers do not double. The higher the tier, the less you pay per sqm of capacity. At the first tier, you are paying $1USD per 102.4sqm. At the highest tier, you are paying $1USD per 336sqm.
Felucia Neurocam has a Premium account. This gives her a land-holding capacity of 512sqm. Let's say she already owns 512sqm. Additionally she purchases another 480sqm of land. This puts her in the lowest tier (512sqm), giving her a total of 1024sqm of land capacity. She owns 992sqm, and can buy 32sqm more without advancing to the next tier. At her current tier level, she will pay $5USD per month above whatever her payment plan is for her Premium account.
Tier is paid for monthly. It's essentially a monthly license fee for the ability to own mainland land, paid at the end of the month.
If you purchase more land than your present capacity, your tier-level will be automatically increased to the next tier that is equal or greater than the amount of land you are holding. When Linden lab bills you for your tier fees at the end of the month, you will be billed for the highest tier you reached during the month, even if it was only achieved momentarily. If you wind up owning any land in excess of your current tier, even for a second, you will be billed for whichever tier you needed to hold that amount of land.
Remember: A Premium account always starts with 512sqm of tier. Any tier that you pay for additionally is added to that amount.
Trammel Boyer has 1008sqm of land, and is paying $5USD in land tier fees (512sqm) per month. His capacity is 1024sqm (512+512=1024). Trammel buys 32sqm, but thinks better of it, and sells that land to Felucia right away. That brought Trammel's peak land holding to 1040sqm, and he will be billed at the 1024sqm tier level (That's 1024sqm plus the 512sqm included in his premium account = 1534) at the end of the month, even though his land holdings are back down to 1008sqm again.
You can also increase or decrease your capacity/tier from the Land Fees section of your account (called tiering up or tiering down), but never to a tier lower than the amount of land you actually presently own.
There are two ways you can consume your land-holding capacity. One is by actually owning land. The other is by donating that capacity to a group. A group may own land because one or more members of the group donate some spare capacity (tier) to that group so that it can use it to purchase and own land as an entity.
We'll talk about some of that another time. Tier isn't really all that hard to understand, if you look at it as a license to own land which is paid for monthly, and remember that you get 512sqm of that capacity just for having a premium account.
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