How often have you bought a burger and fries but paid only for the burger? Have you purchased a mobile phone and a charger but paid only for the mobile? This pricing method is called Price Bundling.
Essentially, price bundling is a strategy where businesses clump several products or services and sell them for the price of one instead of assigning individual costs for each item. Therefore, the bundle itself becomes an individual product.
Who Uses Bundle Pricing & Why?
Generally, bundle pricing is prevalent amongst internet retailers, e-commerce entities, and other businesses offering services or products you utilize in your everyday life.
Here’s a list of use cases where Bundle pricing is a commonly used pricing strategy:
- Internet and cable companies provide multiple options for channel preferences. Each option has a district pricing point and values.
- Restaurants and fast-food chains bundle complementary-tasting food items to drive the sales of an entire meal instead of a single item.
- SaaS businesses offer subscription-based core services bundled with additional features.
- Retail stores offer bundled items to make customers feel like they have purchased a good deal. The store also makes good revenue.
With the above list, it is evident that bundling is widespread across various business verticals. Offering complementary products or services at a discounted bundle price effectively increases perceived value and sales.
The pricing strategy is popular because it allows you to:
- Induce customers into buying additional products
- Highlight your products in the market
- Connect with your audience in a unique way
- Differentiate yourself from the crowd
- Build customer loyalty
- Boost product sales
What Are the Benefits of Bundle Pricing?
Many businesses choose bundle pricing because it creates a win-win situation for themselves and their customers. The sellers are happy with the sales and revenue, and buyers are satisfied with buying multiple products at a single price.
The strategy also delivers other benefits:
• Enhances the buying experience.
Bundling complementary products or services can entice customers to purchase your offering, as it increases the value you provide.
• Improves customer buying capacity.
Customers who cannot buy individually priced items benefit more from bundled offerings. This strategy also encourages buyers to spend more than they originally intended.
• Reduces marketing expenses
Bundle pricing allows you to promote multiple products together, thereby allocating time, money, and other marketing resources to several products instead of concentrating on a single item.
• Optimizes your prices.
Pricing optimization can be done by implementing bundle pricing as a clever way to adjust prices according to customer demographics and preferences.
What Are the Drawbacks of Bundle Pricing?
Businesses looking to implement bundle pricing should also be aware of the challenges that come with this strategy. You may have to address concerns such as:
- Lesser profit for specific products because you are selling them as a part of a bundle at a discounted price.
- Increased cognitive load with complex bundles can make it difficult for customers to decide whether to purchase the bundle or not.
- Customers’ hesitation to spend on a product they do not need or want to invest in.
- Customers’ hesitation to purchase products with too many or insufficient features. If customers perceive that they will spend more money than necessary and receive inadequate benefits, they might decide to take their business elsewhere.
To Summarize
Bundle pricing is an innovative and pragmatic strategy because it offers multiple services or products. However, successful implementation relies vastly on accurate data about your target customer base and the type of market. Another proven way to make this strategy work is to retain customers’ freedom of choice while bundling products.
If you master the knack of creating a bundle that meets your customers’ requirements and brings in adequate revenue, you have a winning strategy in your hands.
