The bundle pricing strategy
- 03 August 2021
Selling more than one product at once can be profitable for both parties. You, as a seller, have the possibility to increase the average order value (AOV). Your customer, on the other hand, pays less for shipping and gets a discounted price. This is what bundle pricing is all about. Today, we want to show this pricing strategy and tell you what you can do to make the most of it in your store.
Today, product bundles are everywhere, especially in brick-and-mortar retail chains. You can go to any supermarket, and you will see tens of bundles of:
- Water and other beverages
- Shampoo with shower gel
- Potato chips with Coca-Cola
- Whisky with glasses
The idea is very simple – customers buy more products and pay less for them. Of course, the exact form is quite flexible (you can sell products with a discount or offer a second/third one for free), but the base is always the same – you create one inseparable set of two or more products, which are next offered at a single price, which should be more attractive than when buying these products separately.
The important rule is this – product bundles are not set in stone. You can come up with an entirely new, creative idea. In fact, it can be an original marketing strategy. Do you want to sell a PS5 gaming console with a toothbrush? Why not! If only you can logically explain this idea to your customers, you’re good to go!
Price bundling
Until recently, price bundling has been a domain of large brick-and-mortar retail stores. Today, however, this strategy is becoming more and more visible in the e-commerce world as well. In the second part of this article, we will show you some of the most interesting product bundles you can find on the Internet. Let’s talk about the pros and cons first, though.
BUNDLED SALE: BENEFITS
Bundle pricing offers some significant advantages, primarily because this strategy is based on a proven win-win model. Both you and your customer get something valuable to them.
From your perspective, as an e-commerce business owner, bundles enable you to:
- Increase AOV, which is good from the financial point of view. In other words, you make more money per order.
- Easily sell some of the less popular products: Do you have some products in your inventory that are hard to sell? All you have to do is create a bundle consisting of your bestseller and a troublesome product.
- Facilitate the shipping process: Because you can put more than one product in one parcel, shipping is quicker and more straightforward.
- Test new sales channels: Product bundles are just perfect to start selling via a new channel, for example, mobile app.
And what about your customers?
- Discounts: Obviously, the biggest advantage comes with saving money (and time), as customers pay slightly less for the bundle, this solution encourages them to buy more products.
- Gifts: Product bundles are frequently purchased as gifts, especially when we talk about premium products.
CONS OF BUNDLE PRICING
First off, you will likely have to introduce some adjustments to your store’s offer and structure. You have to figure out the packing and invoicing issue, especially when you sell thousands of products monthly. And secondly, your customers may not be satisfied with the perspective of buying a set of products that consists of at least one item they don’t need. The key to dealing with this problem is by offering these products separately as well.
Types and examples of product bundles
Depending on the source, you will discover that there are two or three major types of product bundles. In this article, we decided to showcase three types, as there are some essential differences between them all.
MIXED BUNDLING
That’s the most flexible form. You can think of almost any mix of two or more products that can be sold together. For instance, many stores monitor the most popular products in their offer and create bundles out of them. Suppose you sell dietary supplements. Customers often buy a supplement that stimulates muscle growth and a second one that accelerates fat burning. It’s a perfect combination to create such a mixed bundle.
In order to come up with a good idea to create a mixed bundle, you need to know your customers and their needs and analyze the purchasing history in your store. Of course, you can always ask your customers directly (via social media or newsletter) what products they would like to see in bundles.
MIXED BUNDLING EXAMPLE: NINTENDO[1]
Image source: https://store.nintendo.co.uk/en_gb/consoles/nintendo-switch-consoles/build-your-own-nintendo-switch-console-bundle/
In their online store, Nintendo allows you to create a bundle consisting of four elements:
- A Nintendo Switch console (7 versions to choose from)
- One game (over 30)
- Nintendo Online membership
- Additional accessory (which in this option is available for free)
PURE BUNDLING
Here, you create a set of products that can only be bought in a product bundle. The best example is cough syrup which is almost always sold with a small plastic spoon. Also, car mats are usually sold in one set, and so are the staples and crayons. Of course, there are some exceptions. For example, in a professional stationery store, you will find single crayons to buy, but they are sold in bundles in nine out of ten situations.
PURE BUNDLING EXAMPLE: MICROSOFT OFFICE
Image source: https://www.office.com/
You can’t buy just MS Word or Outlook. You need a whole set comprising seven programs, which are currently available almost exclusively in a SaaS cloud-based model.
THE SAME PRODUCT BUNDLING
That’s the type of bundling that’s popular in large retail chains and wholesalers. Bundles are made of the same product. Examples? Water and beverages (six-packs), paper towels, and candy. Of course, such a bundle doesn’t have to be made of FMCG products. Here’s a good example from Home Depot:
THE SAME PRODUCT BUNDLING EXAMPLE: HOME DEPOT
Image source: https://www.homedepot.com/p/Aquasana-18-5-oz-Water-Bottles-Premium-Borosilicate-Glass-6-Pack-THD-WB-6/207206983
They sell six-packs of these bottles for a total price of $22.99. Simultaneously, it’s a good example of pure bundling because these bottles are not available separately.
Discover product bundle ideas and monitor prices with Dealavo
When it comes to product bundles, price monitoring can be difficult. However, it is possible with our help. In the Dealavo app, you can monitor both the prices of the products included in one package and the prices after creating a bundle. Moreover, based on price trends, you can see which products are becoming cheaper on the market. Frequently, it’s a vital hint indicating that it is worth including them in a bundle with a more popular product.
Mind you; some sellers mismark bundled products, which may result in incorrect matches in diverse price monitoring tools. At Dealavo, we’ve managed to deal with this problem. First off, we have high data quality, and additionally – each user can remove incorrect matches directly in the system in order to maintain clean and organized data.
If you’re thinking about introducing product bundles to your offer, take a look at our Competitor’s Assortment Report. Thanks to this feature, you will discover product bundles offered by your competitors. Use this knowledge as an inspiration!
[1] https://store.nintendo.co.uk/en_gb/consoles/nintendo-switch-consoles/build-your-own-nintendo-switch-console-bundle/