BUNDLE PRICING
Definition
Bundle pricing involves selling multiple products or services as a package at a total price lower than the sum of their individual prices. It is a powerful tool for increasing the average order value, moving slow-moving inventory, and enhancing perceived value. There are two types of bundles: pure bundles (available only as a package) and mixed bundles (products also sold individually).
Why it's important
- Increasing the average order value: A bundle encourages customers to buy more than they planned by highlighting the savings they’ll enjoy.
- Selling off slow-moving inventory: including a slow-moving product in a bundle allows you to maximize its value without having to slash its unit price.
- Building loyalty: A well-designed bundle delivers a comprehensive experience that fosters greater loyalty than a standalone product.
A concrete example
A beauty brand is offering a serum for €39, a cream for €29, and an eye cream for €19. Sold separately, the total comes to €87. As part of the “Complete Routine” bundle, the set is priced at €69, representing a 21% discount. This offer generates an average basket size 1.8 times higher than a single-item purchase and sells three products instead of one, resulting in a higher overall contribution margin despite the discount.
How to measure/use it
Building an effective bundle involves four steps: selecting complementary products (that are used together), setting the discount (typically between 10% and 25%), validating the overall contribution margin, and testing its appeal. Pricing analytics tools help identify product combinations that are naturally purchased together (basket analysis) and simulate a bundle’s profitability before launch. The visual presentation of the bundle (savings achieved, crossed-out total price) is just as important as the pricing itself.
Common Mistakes
- Bundling non-complementary products: customers don't see the value in it, and the bundle doesn't take off.
- Cannibalizing individual sales: if the bundle is too attractive, it replaces higher-margin individual sales.
- Neglecting visual appeal: a bundle without a crossed-out reference price or proper presentation won't catch anyone's attention.
Learn more
- Research & Data: Basketball analysis to identify winning combinations.
- Solutions: Pricing Analytics to determine the discount and simulate profitability.
- Tip: Develop a pricing strategy to create a consistent bundling policy.
- Resources: Check out our pricing FAQ to learn about bundle cannibalization.