Design the Deal: Transforming Your Pricing into a Growth Engine
Pricing Pointers, Issue #45
When competition heats up, most businesses default to broad price cuts that erode their bottom line. But there is a smarter play. Instead of cutting prices, you can use unbundling and bundling to redesign your offers. This lets you hold the line on margins while encouraging customers to spend more.
What follows is a curated collection of my past LinkedIn posts (similar to Substack notes), purposefully selected and sequenced for this guide. Together, they provide a logical framework for transforming your pricing from a defensive tool into a growth engine.
1️⃣ Tired of your competitors cutting their prices?
The solution might not be a price war. Instead, try unbundling your current offering. You can attract a wider audience by creating a lower-priced, “no-frills” base product, giving you a competitive edge without slashing prices across the board.
Your profits come from offering high-margin add-ons. These are options that will improve the buyer’s results or experience with the base product. Quality-sensitive buyers will add these to their purchase, while price-sensitive buyers will not.
The end result is that you serve both segments of buyers simultaneously. You achieve this without sacrificing margins on the premium features and benefits that your top-tier customers are willing to pay for.
2️⃣ What if you could make more money with less?
Here’s the trick: give customers only what they need, and get paid extra for what they want. Unbundling is the practice of breaking apart an offer and selling its components individually. It’s an especially powerful strategy in competitive markets for increasing sales and attracting new customers.
To get started, follow this simple three-step process:
Step 1: Define your offer’s components. Distinguish between those essential to all customers and those essential to only some.
Step 2: Based on that distinction, establish a competitive “no-frills” core product using the components essential to all customers.
Step 3: Offer the components not everyone needs as optional add-ons and seek higher margins on these.
3️⃣ They only buy one? The pricing secret that makes them feel smarter while spending more.
For many products, a “buy two, save 10%” offer means nothing to buyers; they either buy one unit or nothing at all. The pricing tactic you need is mixed bundling. This is the practice of selling items separately at full price, or together for a single, discounted price.
For example, if the price of a washing machine is $799 and a dryer is $699, you could offer them together for $1,330. It’s an elegant way to increase the average order value while the customer who upgrades saves $148.
Note that the buyer of the washing machine feels they got a deal on the dryer, and the buyer of the dryer thinks they got a deal on the machine. The buyer who purchases just a dryer pays $699, but the buyer who adds the dryer to their purchase effectively pays only $531 for it.
4️⃣ The common mistake small businesses make: including substitute products.
Substitutes are products or services buyers use in place of one another, such as coffee and tea. If a customer only needs one of those products, the bundle instantly loses its appeal. You don’t want a prospective buyer to think, “I’m paying for stuff I don’t want.”
Successful product bundling means creating packages where each item adds to the overall value without redundancy. The only exception is when the goal of the bundle is to satisfy the buyer’s need for variety. For example, in a bundle of different tea flavors, the value comes from the experience of trying variety rather than just the utility of the drink.
5️⃣ Do not pay customers to do what they would have done anyway!
This is the core principle of successful product bundling, and violating it will kill your strategy. The true goal of bundling is not simply to move more units; it is to stimulate sales that otherwise would not happen.
If you create a discount bundle for products that customers would have bought together at full price anyway, you are simply sacrificing margin on a guaranteed sale. That’s a pure, unnecessary loss.
Before you launch any bundle, ask yourself a critical question: Does this package attract a customer who would have otherwise only bought one item, or perhaps not purchased anything at all? Answering “yes” is how you drive incremental sales, which is the true measure of success in bundling.
The Bottom Line
Stop viewing pricing as just finding a number. Instead, view it as a puzzle: “Which of our products should be sold together and which should be sold separately?” Move away from reactive discounting and embrace strategic offer design. Don’t just lower your price to close the deal; design your offers to create the deal.