Bundling (group selling): definition, examples and prices

Bundle pricing involves selling several products or services together in a single package at a price lower than the sum of their individual prices. It's also known as group buying or bundled offers. Its purpose is to increase the average order value, sell items that don't sell well individually, and enhance the perceived value of the offer. For example, a set of three skincare products sold for €69 instead of €87 separately. A well-designed bundle improves overall profit margins; a poorly executed one cannibalizes more profitable individual sales.

Bundling, group selling, and bundled offers all refer to the same business practice: offering several products together at a single price. "Bundling" is the English term, used in marketing and pricing; "vente groupée" and "offre groupée" are the common French expressions. A distinction is made between pure bundling, where products are sold only as a bundle, and mixed bundling, where they are also available separately. Cross-selling , which suggests a complementary product without a discount on the bundle, is a related practice.

To set the price of a bundle, we start with the sum of the unit prices and apply a discount significant enough to encourage the purchase of the bundle without destroying the profit margin. We verify three points: the bundle's contribution margin must remain higher than that of the individual sales it replaces; the discount must be consistent with the perceived value for the customer; and the bundle must not cannibalize the most profitable individual sales. In practice, the discount is often within a moderate range, which is tested on a limited sample before being rolled out more broadly.

Bundled products present three main risks. They can reduce profit margins if the discount on the bundle isn't offset by increased volume. They can cannibalize individual sales when customers who would have bought a single product at full price opt for the discounted bundle. Finally, they can create the impression of an artificial discount if the advertised reference price has never actually been charged, a practice regulated by consumer law. Hence the importance of simulating the impact of a bundle on the category's profit margin before launching it.

The performance of a bundle is measured by the overall margin generated, not just its own sales. We track changes in average order value, the attachment rate between the products in the bundle, the volume sold in bundles and individually, and the category's contribution margin before and after the launch. A bundle that sells well but reduces the category's margin because it replaces full-price individual sales is a false success. Comparisons are made over equivalent periods, taking into account seasonal and promotional effects.