Advantages of bundle pricing
Price bundling helps you overcome the difficulty of getting potential customers to make a purchase of specific products or services. It simplifies their buying experience and can potentially increase average order values through the combination of high-value and low-value products.
Simplify the buying experience
When you offer a bundle of normally separated products or features that, together, your customers need to accomplish their goals, you make the purchase decision easier. Instead of expecting them to cobble together different products or features, you’re offering a one-stop shop for them. That makes the experience of interacting with your business and purchasing your product simple and efficient.
Bundling is a great way to increase your sales and profit margins as well as the value you provide to customers. We see this in companies like Amazon, which often create dynamic product bundles based on complementary products their customers typically purchase. This allows Amazon to create larger margins for themselves while also offering a lower price than their competitors.
Let’s take a look at an example with sticky notes of different colors. When a customer purchases orange sticky notes for $6.72, Amazon can bundle those together with aqua sticky notes for $9.03.
Impact of price bundling on margins via McKinsey
This results in a 34% markup from the customer’s intended purpose, helping Amazon tap into more revenue through the bundle while still offering a low price for orange sticky notes.
With a bundle pricing strategy, you’re not just putting together products that complement one another from a business perspective; you’re also giving customers more value through the bundle than they would receive from each individual purchase. That compounding value makes customers more loyal and can lead to future purchases.
Move lower-volume products
If you have a product or feature that’s underperforming, price bundling helps you boost customer engagement by selling it alongside a more popular one. Just make sure that both of the products you’re bundling together increase in value as a result of the bundle. You don’t want to decrease the value of a more popular product or feature by connecting it with one that your customers don’t actually need.