Bundle pricing is one of the most common pricing strategies out there: it’s used by almost every business in all industries. If you’ve ever subscribed to cable TV, gotten a mobile phone plan, or eaten at a fast-food restaurant, chances are you’ve purchased a product bundle.
Product packages are effective because they give your customers an attractive offer that encourages them to buy. However, there is more to it than that. You need to have the right approach to get a successful result out of this strategy.
In this post, we’ll talk about the benefits of price bundles and how you can successfully use them in your ecommerce business.
What is bundle pricing?
Price bundling is where products or services are combined and sold together at a lower price than they would be if the consumer bought them individually.
Product A and Product B might be beyond the budget of some of your customers. But when bundled together, the bargain price might be attractive enough to lead to a sale.
One good bundle pricing example is fast food value meals. A burger, side of fries, and a large Coke might cost $7 if you buy them separately. On the other hand, a value meal of the same three things might only cost you $5, which might encourage more people to buy.
A bundle pricing strategy will give you a lower profit per transaction, but the added sales volume will hopefully lead to more significant revenues overall.
Advantages of Bundle Pricing
Service or product bundle pricing offers plenty of benefits when done strategically.
One advantage is that you can dispose of your slow-moving products much faster. You can bundle these together with more popular items and hope that the lower price will encourage people to buy. Yes, it’s selling something at a lower profit, but some profit is better than none at all.
Pricing bundling also helps you attract customers that you usually wouldn’t—namely, bargain hunters. While they might not stick to your brand long-term, the short-term revenue you get is generally worth using this pricing model. Plus, who knows, they might like your products so much that they won’t mind paying full price next time.
Lastly, product bundles can make the buying experience much simpler. By removing the burden of choice, you eliminate obstacles for the buyer. That leads to more chances of a sale.
How To Create and Use Bundle Pricing
There are many approaches to successful bundle pricing, but all of them should start with one question: “how can I create more value for my customers?”
A common way of doing this is by featuring a popular, high-ticket, or fast-moving product as your bundle’s main component. You then complement it with accessories, add-ons, or slow-moving items to increase the bundle’s overall value.
You can also combine two or more popular products to make the bundle even more attractive to consumers.
Most bundles work because of the principle of prince anchoring. It’s the psychological trick of positioning two prices together so that one is seen as a bargain, in some cases much more so than it actually is. Bundling a higher-priced product with lower-priced add-ons, for example, will make the costlier item seem more affordable and valuable as a result.
Types of Bundle Pricing
Pricing bundles are typically classified into two general strategies: pure or mixed.
- Pure Bundling. A pure bundle is a “buy it all or not at all” scenario. Customers can only buy the bundle itself and not the products inside of it individually. For example, you usually can’t subscribe to individual channels in a cable subscription. You have to buy the entire bundle.
Most bundles are joint bundles, which combine two or more products or services of often equal value. However, some are leader bundles, where one product (the “leader”) is seen as more valuable than the others.
- Mixed Bundling. Mixed bundling allows customers to buy the entire package or just parts of it at their discretion. Often, buying the bundle is much cheaper than purchasing the individual components, encouraging the customer to go for the former.
Product Bundle Pricing Examples
There are plenty of bundle pricing examples out there, and you’ll be hard-pressed not to find them.
In the restaurant industry, bundles are not limited to fast food. Even fine dining establishments use them in family meal packages or lunch specials to drum up sales during off-peak days and hours.
Online ecommerce stores use bundles extensively, especially for products with lots of add-ons and accessories. Photo editing software is a classic example, as they are typically packaged with the option to add special editing themes, add-on tools, and popular templates, all at a bargain price.
Software-as-a-service also makes use of bundling strategies. Annual subscriptions are less expensive than monthly payments, and some might even offer extra features and add-on software for a yearly plan.
Price bundling is an effective software selling strategy
A price bundling strategy can be a powerful tool to increase your software sales and revenue. Combine it with a robust ecommerce platform like FastSpring, and you can grow your business starting today. Contact us and see how we can help you.