When you buy a new duvet, odds are you’re also in need of a duvet cover, sheets, pillows, and pillow cases. Which is why you’re often able to purchase the whole set at a discounted price. This practice is called price bundling, and it can benefit both the customer and the business.
Learn about different types of price bundling, the benefits and risks of implementing the pricing strategy, and three examples of ecommerce businesses that offer price bundling.
What is price bundling?
Price bundling is a marketing strategy in which multiple products or services are offered together at a single price, typically lower than the total cost of purchasing each item separately.
You can choose to bundle products:
- Users are likely to use together (like shampoo and conditioner)
- From the same category (like lipstick and eyeliner)
- In value packs of the same product (like socks or hair ties)
- Unrelated to each other, to encourage customers to try something new
Advantages of price bundling
- Increases average order value
- Enhances perceived value for customers
- Improves inventory management
- Simplifies purchase decisions
- Introduces customers to new products
Many businesses use price bundling. If you’re looking to try it for your brand, consider these five advantages of bundle pricing:
Increases average order value
Bundle pricing increases customer spending by encouraging them to buy multiple items in a single purchase. This results in a higher average order value—or the average amount of money customers spend per transaction—which helps increase sales and makes for more profitable customer relationships.
Enhances perceived value for customers
Successful price bundling makes customers feel like they’re getting a better deal than if they bought the same products at individual prices. This can increase customer satisfaction and loyalty.
Improves inventory management
Bundle pricing strategies can also improve inventory management by combining high-demand products with slower-moving stock. Bundled products can help clear excess inventory, reduce storage costs, and optimize product turnover.
Simplifies purchase decisions
Price bundling can also streamline the buying process for your customers. Offering curated bundles reduces the need for customers to choose items individually, making it easier for them to complete purchases efficiently. By eliminating decision fatigue, bundles can create a smoother, more satisfying buying experience.
Introduces customers to new products
Combining complementary products in the same bundle helps introduce your customers to new products. This bundling strategy is designed to encourage customers to try items they might not typically purchase, expanding their exposure to your brand’s offerings. Positive experiences with new products can lead to future purchases, as well as improved customer loyalty.
Disadvantages of price bundling
- Reduces profit margins on individual products
- Limits customer choice
- Potential to disappoint customers
Price bundling strategies don’t always work as planned. Here are a few risks to be aware of:
Reduces profit margins on individual products
One downside to offering multiple products at a discounted price is that it reduces the profit margins on those products compared to if they were sold individually at full price. A price bundling strategy could erode your business’s profitability if not managed carefully.
To avoid this, optimize pricing to maintain healthy margins while still providing enough of a discount to entice potential customers. Your increased sales volume as a result of price bundling should make up for the marginally lower profits on each individual product.
Limits customer choice
Price bundling has the potential to limit customer choice when bundles don’t align with customer preferences or needs. This is especially true of pure bundling, when products are available only in the bundle and are not sold separately. In these cases, customers who prefer the flexibility of making smaller purchases may be discouraged from shopping with you at all.
To address this, offer both bundles and standalone purchasing options, so customers can choose the shopping experience that suits them best. If you’re set on pure bundling, make sure the products in your bundle are truly complementary, so that customers don’t feel like they’re being forced to buy things they don’t need.
Potential to disappoint customers
While price bundling can be a great opportunity to introduce customers to new products, this strategy can backfire if customers find that not all of the products in the bundle meet their expectations or needs. They may feel they’ve been coerced into buying the product, and as a result, lose trust in your brand.
To mitigate this, ensure all your products meet your brand’s quality standards. Create bundles of products that are truly complementary and offer buy-alone options in addition to your bundles.
Types of product bundling
There are a few overlapping bundle structures you can use to attract customers:
Pure bundling
Pure bundling is a pricing strategy in which products are exclusively sold together as a package, and customers cannot buy the items separately at a single purchase price. For example, a meal kit subscription bundle may include ingredients, a recipe card, and a kitchen utensil that can’t be purchased separately.
Mixed bundling
Mixed bundling, also known as custom bundling, is when customers can choose to buy products individually or as a part of a bundle, typically at a discounted bundled price. This approach provides flexibility, while still encouraging larger purchases. For example, you may sell a single pair of socks in your store for $2 or seven pairs for $12.
Leader bundling
In leader bundling, one primary product (the “leader”) is sold along with smaller, complementary items. Customers buy the package because of the lead item, while the other products enhance the value of the bundle.
Joint bundling
In a joint bundle, two products or services are bundled together and sold at a single price. Joint bundles generally include products that complement each other or work well together. One example of joint bundling: a book and wine pairing service that offers curated gift boxes.
Ecommerce examples of price bundling
Many ecommerce businesses use price bundling to boost product sales. Here are three great bundle pricing examples.
Glossier
The viral beauty brand Glossier bundles its products in curated sets. For example, its Night Out Set includes a perfume, lip gloss, lip liner, and brow pencil for 15% less than if each of these items were purchased individually. These mixed bundles of complementary products give the customers everything they need to complete their look, simplifying purchasing decisions while encouraging larger orders.
Fly By Jing
Fly By Jing sells Asian chili oils and sauces individually and in mixed bundles. Its Sichuan Starter Gift Set is a sampler of four of its bestselling sauces for a discounted price. This offering encourages potential customers to try new products. Fly by Jing also sells a Hot Pot Starter Set, which is a great example of leader bundling. This package features a hot pot (the lead item), as well as smaller complementary products: two sets of silver chopsticks, two slotted spoons, and a soup base.
Stitch Fix
Stitch Fix is a personalized styling service that sends customers a curated selection of clothing. Each order—or “fix”—is a bundle of five items. This approach simplifies decision-making and encourages customers to try a variety of complementary pieces. While customers always receive the whole bundle, they have the option to return the items they don’t want. This flexibility distinguishes Stitch Fix’s strategy from true pure bundling.
Price bundling FAQ
Who uses price bundling?
Many industries use price bundling as a strategy to increase sales, including ecommerce businesses, telecommunications providers, software companies, and the food industry.
How do you know if price bundling is right for your business?
To determine whether price bundling is right for your business, assess your offerings and customer preferences to identify complementary products that could enhance value when sold together.
What is the meaning of price bundling?
Price bundling is a marketing strategy in which multiple products or services are offered together at a single price. The bundle pricing strategy encourages larger purchases, promotes complementary products, and simplifies purchasing decisions.
What is an example of price bundling?
One example of price bundling is when beauty brands, such as Glossier, bundle complementary products, such as a foundation and a concealer, and sell them at a lower price than if those same products were purchased separately.
Is price bundling illegal?
Price bundling is generally legal and widely used across industries. However, this business strategy could face legal scrutiny if it leads to anti-competitive practices, such as predatory pricing. Make sure your bundle pricing strategy does not restrict market access for competitors or deceive customers.
