BUNDLE PRICING STRATEGY: BENEFITS AND TIPS FOR USING IT
Bundle pricing is one of the many pricing strategies that companies use to increase their profits. With bundle pricing, a company can combine products and/or services together and sell them for one price.
An example of this type of pricing is the low-priced meals that are offered at most fast food establishments. The price of the meal will be lower than if the customer chooses to buy all the components separately.
A classic example of bundle pricing is the McDonald's Happy Meal. Although the components have changed a lot over the years, instead of buying each item from the menu separately, you can get a combination of them at a lower price.
The same situation is with the sale of goods in stores. You have repeatedly seen advertisements with this headline: buy one product - get the second one free, or buy this product and get a gift.
Wherever you look, there are special offers, discounts for buying more items, etc. Bundle pricing strategy is a very common strategy, especially in the retail industry.
Let's move on to the next important issue.
How can bundle pricing help grow your business?
Increase average order value
Often one of the products has a much higher margin but is less desirable to the customer. If you offer that product in a bundle with others at a discount, you can increase the average profit per transaction by satisfying the customer.
Instead of buying only one product for its full price, customers buy 2 or more products in a single transaction. Even with the discount, customers still spend more than they would if they bought only one product.
You can combine products that have been in stock for a long time with a fast-selling complementary product. In some cases, customers don't know about your other products, so this strategy can help introduce them to new offerings that are worth trying. This reduces inventory holding costs, reduces waste, and frees up storage space.
Quicker purchase decisions
People are faced with too many products on a daily basis, which often leads to an inability to make a purchase decision. Help your customers by offering multiple products at a bargain price. This makes their lives easier as it will save time searching for each individual product in the store.
Tips for successfully utilizing a bundle pricing strategy
If you have products or services to offer together or if you want to add value to certain products, a bundle pricing strategy is ideal.
To create a successful product suite, you need to understand what your customers are looking for. The goal of the strategy is to make sure that the desired product or service is presented in the set. This will become a valuable component that will be used in further advertising. Complete the set with a product that emphasizes its value.
Offer the created set at a single price, and at the same time give customers the opportunity to buy each product separately. It is important that customers understand the benefits they will receive from purchasing such a set. In this way, you will give them freedom of choice and the opportunity to save money.
While intentionally discounting products can reduce their perceived value, bundling pricing counters this by pairing products well. This adds value to the customer and helps generate more revenue for the company.
Successfully combined products are very popular among customers. If everything is done correctly, a bundling pricing strategy helps increase sales and profits for companies, this is what makes it so popular today.