What is and why use bundle pricing? Is it right for your business?
Businesses are always looking for ways to attract customers and increase their sales, such as setting a good price for their products. No one wants to buy a product or service that is too expensive, especially if you can find an alternative at a lower price.
Hence, businesses use various pricing methods, such as bundle pricing, captive pricing, dynamic pricing, etc. at different stages for attracting potential customers. They go through a tough time determining the best price strategies that would benefit the customers and profit their business as well. This can be quite difficult because of the competitors who are also finding ways to do better when it comes to pricing.
Today, consumers look for buying products or services at a lower price. They want to save money and opt for shopper-friendly products that offer a discount or something for free. In the business world, this strategy is known as the bundle pricing method. Read on to know what bundle pricing is, how it works, and whether it is the right strategy for your business.
What Is Bundle Pricing?
Businesses use this method to attract customers. It is the strategy of combining numerous products or services into a conveniently priced package. Thus, the customer pays a lower price for the bundle than what they had to pay for buying each item separately.
Bundle pricing promotes the purchasing of more than one item and benefits consumers and businesses in several ways. It revolves around the idea of taking advantage of consumer surplus. Every business understands that a customer is willing to only pay a specific price that is convenient for them to buy a good or service.
Thus, if a business is able to set the price equal to or even lower than the price a customer wishes to pay, it will increase the buyers’ willingness to pay.
Bundle pricing helps businesses/sellers benefit from customer surplus. It refers to the difference between the price a customer is willing to pay and the price the customer pays to buy a good or service.
When And Why Use Bundle Pricing?
Well, if you look at it from a business perspective, it is the best strategy for startups looking to attract customers. Also, if a business wants to sell its lesser-known products with their best sellers, a bundle package at a reasonable price will help.
Otherwise, customers will always be able to find an alternative source from where they can buy goods and services at a lower price. The idea of bundle pricing is to give the customer more than two or more goods and services at one price. Hence, if a business has a low marketing budget or they want to sell their unpopular products, bundle pricing is the best strategy.
Examples Of Bundle Pricing
Customers find bundle pricing to be quite reasonable and good for them. For instance, if a customer wants to buy a resale phone, mobile retailers will seize this opportunity to offer a deal where they can buy the phone, with the charger and a pair of headphones at a lower price. The price of separately buying these products would cost the customer more.
Another example would be buying food. Many restaurants offer packages, or as they call it “food deals.” For instance, a food deal for dinner may include starters, main course, and dessert for $30. But if the consumer buys these items separately, they may have to pay more.
Combo-deals at fast-food restaurants are also a prime example of bundle pricing where the customer gets an entrée, a side dish, and a drink for one set price.
Besides everyday items, sellers also offer bundle pricing at large purchases, such as buying a TV. They may sell a TV stand, a speaker set, and a DVD player at bundle pricing.Do You Know Your Competitors Prices? Click Here to Start Tracking Them Today!
Pros And Cons
Just like any other pricing method, this one has its pros and cons for business and customers. Let’s have a look at the pros first.
- Sell more goods and services, ultimately benefiting the business by increasing sales and profits.
- Attract more customers as they can get more than one product at a reasonable price.
- Also, businesses can target different groups using one strategy, such as buyers looking for discounted deals and those looking for convenience.
- It will lower the marketing cost.
- Businesses can get rid of unsold stocks using the bundle pricing strategy
- Bundle pricing and adding a value reduce the buyers’ hesitancy, making for an easier sell
- Not all customers are attracted because they prefer to pay by the specific products rather than price bundling.
- The bundle might offer something the customer doesn’t want. Therefore, the customer is not willing to pay for it.
- It may reduce the profit for the individual sale of the product you are offering in the bundle pricing as well.
Should You Use It?
Bundle pricing is an appealing method to attract customers as they get not only the goods they want but also other products at a discounted price. Hence, the customers will want to buy more products/deals, increasing your sales.
You must adopt the bundle pricing strategy if you are new in the market and want to attract customers and drive your sales. Plus, you can use the method for selling a product that did not sell the way you want. Bundle pricing can help you market an unpopular product without spending extra money on its marketing.
A business needs to understand what the customers want at the right price. This means, including goods and services in the package that a customer would be willing to pay for. They should try to add products that would be useful to every customer. Setting the right price is the key to ensure it’s a win-win situation for you and your customers.Do You Know Your Competitors Prices? Click Here to Start Tracking Them Today!