Bundle Smarter: 10 Dos and Don’ts
Pricing Pointers, Issue #5
Bundling products and services can be a powerful strategy to boost sales and deliver greater value to customers.
However, effective bundling requires careful consideration to ensure both customer satisfaction and profitability. Here are ten key dos and don'ts to guide your bundling efforts.
1 - Do study how products and services are used together
The items in the bundle should logically go together in the minds of your customers.
To find bundling opportunities, look for complementary products – those that are purchased and/or used together.
Think about complementary products or services that are used before, during, or after the main product or service you offer.
2 - Do bundle products in ways that will enhance customer value
A bundle can increase customer satisfaction by simplifying the buying process.
The potential pitfall of buying products separately is they may not mesh well.
A well-designed bundle gives the buyer a package of products designed to work together.
Together, the bundled products give buyers more of what they want.
3 - Do satisfy diverse customer preferences with mixed bundling
With mixed bundling, buyers have the option to purchase products on their own or as part of a package.
The price of a mixed bundle is less than the sum of the individual prices of the products included.
This difference is known as the bundle discount. It serves as an incentive for the buyer to purchase the package.
Mixed bundling lets customers tailor their purchase to suit their needs and budget.
4 - Do communicate the clear benefits and value proposition of your bundles
Customers gain several key benefits from purchasing a bundle.
Of course, there is the cost savings when the bundle price is less than the sum of individual prices.
Bundling also makes the buying decision easier.
First, buyers enjoy the convenience of purchasing multiple related items from a single provider.
Second, bundles help buyers get the right combination of products for their needs. This leads to a better result or a more satisfying experience.
5 - Do create an attractive yet profitable bundle price
Mixed bundling (see #3) is a form of discounting.
The bundle is sold at a discount to encourage buyers to purchase the bundle and spend more overall.
A rule of thumb: start with a discount of 10% - 20%.
But never set the bundle price so low it becomes cheaper to buy the bundle than a product in the bundle.
6 - Do configure bundles to address specific customer challenges
Go beyond simply grouping products and services together.
Understand what problems customers are trying to solve. Then offer a solution in the form of a bundle.
Or you can let buyers configure their own bundle.
For example, let buyers pick one item from each of several predefined groups of products.
7 - Do use bundling to protect the price image of your premium products
There's a danger of putting a premium product on sale. You can damage its perceived value and hurt future full-price sales.
With mixed bundling, the price of the bundle does not have to state exactly which products are being sold at a discount.
When you want to promote a premium product, bundle it with something else. Apply the discount to the bundle itself, and leave it at that.
8 - Don't create bundles that offer little or no additional value to the customer
When a bundle doesn’t offer enough extra value, buyers won’t purchase it.
Even a large bundle discount may not be enough to sway them.
Or the discount has to be so large, that profits fall even as unit sales increase.
Bundle products that buyers might purchase with a little bit of financial incentive.
9 - Don't bundle products together that buyers would have purchased together anyways
Suppose you offer a bundle of two products for a price that’s less than the sum of their individual prices.
If buyers would have bought both products at full price, your bundle will cannibalize those sales.
Bundling becomes profitable when enough buyers of one product decide to purchase the bundle instead. The profits from these additional sales must outweigh the cannibalized profits.
Remember, the goal is to stimulate sales that otherwise would not happen.
10 - Don't assume that all products are suitable for bundling
Sometimes it’s more profitable to sell a product individually rather than as part of a bundle.
This happens when a particular product is highly valued by just a small segment of buyers. And other buyers aren’t willing to pay very much for it.
Sell these products separately. Then you can price them closer to their value to the segment of buyers that really want them.