What Is a Bundle Pricing Strategy? (With Pros and Cons)

By Indeed Editorial Team

Published 13 November 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

A bundle price strategy is a method of selling combined products or services, usually at a discounted price. This strategy benefits both buyers and sellers, as sellers receive more value from their deals and buyers can purchase goods and services at a reduced price. Understanding this pricing strategy can help you identify the pros and cons of bundles. In this article, we answer the question 'What is a bundle pricing strategy?', list the variations of bundling strategies, outline its pros and cons and share several tips for creating bundles.

What is a bundle pricing strategy?

The answer to the question 'What is a bundle pricing strategy?' is that it's a method for combining products and services to sell at a single price. One of the most common examples of a bundle pricing strategy is a meal deal offered by many fast-food restaurants. Rather than buying a single item, you can buy several items at a reduced price. The purpose of bundling products is usually to increase business revenue, as customers are technically purchasing more goods and services, even if the business offers them at a reduced price.
Related: What Is a Price Strategy? (With Types and Definitions)

Types of bundle pricing strategies

There are typically two types of bundle pricing strategies, which you can explore below:

Pure bundling

This bundling strategy is when customers have the option to purchase the goods and services as a bundle, but not independently. For example, a car manufacturing company might sell a vehicle with several bundle options. These bundles incorporate individual features that you can only get through the bundle. One bundle may have an advanced navigation system, a custom stereo system and several reverse cameras. A customer can't purchase the navigation system as a standalone product. If they want the navigation system, they require the entire bundle.

Related: How to Price a Product (Plus Tips and Why It Matters)

Mixed bundling

Mixed bundling is when a business provides products or services as a bundle, but customers can also purchase the products or services independently. For example, when ordering food from a fast-food restaurant, customers can buy a meal including chips, a drink and a burger. The customer can also purchase each of these items separately. If the customer purchases individual items, though, the prices are usually higher than in the meal. The cost of a meal is still more expensive than single items included in the meal, but it offers more value to the customers.

Pros and cons of bundle pricing

Below, you can explore several advantages and disadvantages of bundle pricing:

Advantages of bundle pricing

Here, you can find several advantages of adopting the bundle pricing strategy:

Introduces new products

If a business has a new product available to the market, it can bundle it with an established product. This can be an excellent method for showcasing a new product and increasing product awareness. For example, a business introduces a new camera lens. It bundles the lens with one of its most popular cameras to boost product awareness. The camera already receives attention from customers and prospects, who are now aware of the new lens. Customers and prospects may also associate the new lens with the proven performance of the popular camera.

Related: A Step-By-Step Guide to the Product Life Cycle (With Examples)

Attracts new customers

Bundle pricing might convert prospects into customers as deals and discounts often entice purchases. Some prospects might be wary of trialling a new product, as they're uncertain of its performance and features. They might feel discouraged about making a purchase at full price. When prospects discover a bundle deal, though, they may feel like they're getting more value for their money.

Increases customer spending

In many situations, bundle pricing can encourage customers to spend more money. They usually receive a discount on items, but they're purchasing goods they might not consider purchasing as a standalone product. Bundle pricing can motivate customers to spend more money than they might originally intend, as you're offering them more value for their purchase. The pure bundling strategy usually increases customer spending the most, as customers don't have the option of purchasing items individually.

Related: What Is Customer Value and How to Measure it (With Benefits)

Lowers marketing costs

Bundle pricing can be an excellent opportunity to reduce marketing expenses, as you can also bundle advertising. There may be some items where individual marketing campaigns might cause a negative return on investment (ROI). Rather than committing resources and finances to advertise individual products, you can showcase products as a bundle, increasing the product awareness of each item through a single advertisement.

Related: What Is Cost Management? (Complete Guide and Tips)

Provides personalised prices

Depending on the price bundle strategy, you might provide bundle customisation options to customers. Customisable bundles allow customers to include and exclude products or services in the deal. When customers can customise deals and discounts, they typically feel encouraged to purchase, as they have more control over their purchasing decision. A customisable bundle can also increase the bundle value to specific customers. Some bundles may incorporate many products that don't interest the customer, discouraging them from making a purchase.

Related: What Is the Consumer Decision-Making Process? (With Stages)

Clears excess stock

Pure bundles can be an excellent method for selling excess and idle stock. When creating a bundle, you can include items that are relatively unpopular. Customers may still feel inclined to purchase the bundle, as the other goods provide value.

Disadvantages of bundle pricing

Below, you can analyse some potential disadvantages of using the bundle pricing strategy:

Can discourage customers

While a pure bundle can increase customer spending, it might discourage prospects from becoming customers. Some prospects may observe a bundle and determine some included items don't provide value. Rather than spending additional money on the bundle, they might rather purchase a product individually elsewhere. You can usually resolve this issue by researching your target audience and tailoring bundles to provide the most value. You can also create a customisable bundle, allowing prospects to increase their perceived value of the bundle.

May lower profits for a specific item or service

Price bundling might lower profits on specific goods or services, as you typically offer them at a discount price in a bundle. If customers only purchase a specific product when it's in a bundle, you're technically providing the item at a constant discount, which may cause a profit loss. The solution to this issue is usually to select goods for a bundle based on the sales performance of individual goods or services. If a product has an excellent sales performance, you might exclude it from bundles, as customers are happy to purchase the product at full price.

Might impact public perception

When bundling items, some prospects and customers may assume the products in the bundle are of low value because you're offering them at a discount. This can depend on many factors, though, such as brand awareness, product awareness, brand experience and brand equity. For example, if customers associate high-quality products with a brand, they may perceive a bundle as an excellent discount opportunity. If a brand has minimal exposure and awareness, customers may question the value of the discounted items.

Related: What Is Public Relations? (With Examples of Careers)

Potential to decrease customer satisfaction

Depending on the bundles you offer, some items in the bundle might reduce customer satisfaction. This can affect their overall perception of the brand. For example, a customer purchases a bundle with three products. One item is of excellent quality and provides exceptional value to the customer. The other two items, though, provide minimal value to the customer. This reduces their overall satisfaction with all three products, even though one product provides good value. You can resolve this issue by including complementary items in the bundle, ensuring the customer gains value from all items.

Tips for creating bundles

Here, you can examine several tips for creating engaging and valuable bundles:

  • Consider the target audience. When creating bundles, it's often an excellent idea to ensure the items in the bundle relate to the target audience, particularly if the brand sells a range of products. By creating bundles tailored to the target audience, you can maximise the customers' perceived value of the bundle.

  • Include complimentary items. Similar to creating bundles that relate to customers, it can also be helpful to include items in a bundle that relate to each other. This can ensure customers gain value from each item individually and collectively, enhancing their satisfaction.

  • Review sales and marketing data. If you have access to business analytics, such as sales and marketing performance data, consider reviewing the data carefully. Sales and marketing data may provide valuable insights to help you decide which items to bundle and whether to make the bundle pure or mixed.

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