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Acing your Product Bundling Pricing Strategy

You’ve seen it, the shrink-wrapped package of shampoo and conditioner, the meal combos with a burger, fries, and drink – all promising convenience, savings and extra value. These are just some examples of product bundling pricing in action.

But did you know that subscriptions are also a clever way to implement product bundling pricing? At Upscribe, we know a thing or two about optimizing subscription businesses. So let’s take a look at product bundling pricing and how it can work for you.

What is price bundling?

Price bundling or product bundling pricing is a pricing strategy where two or more complementary products are sold together for a price that’s lower than what the products would have cost individually. 

The discounted price motivates consumers to buy the bundle because it’s a better deal than buying them separately. This leads to increased sales of all the products in the bundle for the seller.

For example, an art supply store sells a popular canvas for $5, washable paints for $2 and slow-moving paint brushes for $3, and wooden easels for $3 separately. The company then decides to create a beginner’s art bundle with all the products for a discounted price of $10.99. 

The customer’s perceived value of the package is higher because it has everything they need to start their painting hobby. It’s convenient because they don’t have to look for brushes, canvases, or paints separately. They’re also saving $2, so they buy the bundle. 

On the seller’s side, they’re now able to move the inventory of the slow-moving brushes and easels together with canvases and paints while still making a profit. It’s a win-win.

Different price bundling strategies

There are different price bundling strategies or techniques. The type of products you’re selling will determine which bundling strategy is appropriate for your business. The two common bundling strategies are pure bundling and mixed bundling.

Pure bundling

Pure bundling is where the products within a package or bundle are only sold together. You can’t buy one without the others. From our art bundle example, if the seller only sold the bundle together and not separately, it would classify as a pure bundle.

Another example of pure bundling is Blue Apron’s subscription meal kits. The kits are made up of fresh ingredients which you use to create a home-cooked meal based on your chosen menu. The ingredients cannot be bought separately.

Mixed bundling

With mixed bundling, the products are sold together as a bundle but there’s an option to buy them separately. Billie sells women’s shaving kits, including the smooth operator deluxe starter kit. The 5 products in the bundle complement each other to provide a “full shaving experience”. Buying the products separately on their website will cost $40.00, but as a kit they sell for $35.

How price bundling can help you grow your business

Increase Average order value

Instead of buying just one product for its full price, a customer buys 2 or more products in a single transaction. Even with a discount, they’re still spending more than they otherwise would have if they just bought one product. This results in an increase in the average order value.

Simplifies buying decision 

Nowadays your customers have all the information they need at their disposal. It’s easy to look up prices and product information to make comparisons quickly with the click of a button. When you make the price of individual components known, price-conscious consumers are able to weigh the value of the bundle and make a purchase decision quickly because the benefits and savings are clear.

Helps move stagnant stock

With bundling, you don’t have to discard stagnant stock. You can pair it with a complementary fast-moving product as a bundle. In some cases, the customers aren’t aware of your other product, so bundling could help introduce them to new product offerings to try.

What to avoid when bundling products

Bundles that are incompatible with customer needs

Customers may not buy the bundle if they feel like they don’t need the other products in the package. Don’t just add random products.

Think of the customer journey while using your products and consider what else could go well with one product for the customer to have an enhanced experience. Done wrong, bundling could be detrimental to your brand. Bundling unnecessary products can look like a money grab, where you’re trying to get them to pay more unnecessarily. 

Restricting customers’ freedom of choice

Another problem is that if you remove the customers’ freedom of choice to buy products individually, they could decide not to buy from you at all.

For example, if the art bundle in our previous example was a pure bundle, customers could get frustrated because they just wanted canvases and paint. Or they just want to buy paints from a different brand. 

They could end up buying from a supplier that gave them the choice to either customize their own bundle or allow them to buy separately. Include the option to purchase individual items at a premium rate.

Examples of price bundling done right

  1. Fenty Beauty

Fenty Beauty has various skin care bundles that include an essential 3-step skincare routine. These are complementary products, which means the sale of one product drives the sale of the others. Most customers don’t just buy a cleanser. They usually buy all 3 because they’re used together in a skincare routine.

What they did right

  • Selling them as a bundle reduces the chance that a customer will buy toner from one brand, and a moisturizer from a different brand. They use one brand for all 3 products 
  • Showing the price savings from buying the bundle as opposed to buying them separately shows the potential savings. 
  • Showing a significant price reduction (over 30%) customers can get from purchasing the bundle, from $96.00 to $61.50.
  • The individual prices of the products are shown for comparison. Customers can see the cost of buying them separately or buying all 3 but not in the bundle.
  • To sweeten the deal, an even lower (installment) price is offered through Afterpay.
  1. Beekeepers Naturals

Beekeepers Naturals have a variety of health bundles to help improve wellness and immunity. The products are available for sale individually or as kits.

What they did right

  • A 10% discount is applied at checkout and a further discount is passed to the customer for choosing the bundle as a monthly subscription.
  • They have reviews from verified buyers as social proof and a money-back guarantee to remove any obstacles to buying.

Tips for successful price bundling

To create a successful product price bundle, you’ll need to analyze your products to see which will complement each other in a bundle. Next, you have to decide which bundling apps you’ll use for your store. Make sure the following fundamentals are in place to help tip the scales in your favor.

Lead with benefits not just price

Yes, customers want savings and to snatch the best deals, but for the bundle to be of real value, they need to know the benefits of the products in the bundle. Remember, the perception of value to customers is also psychological and functional. Tell them what they’ll be gaining from the bundle and why it matters.

Include Product Recommendations

If you’ve been online shopping and saw the words” you might also like” or “ frequently bought together” then you know the product recommendation algorithms are hard at work. And it’s not in vain. Product recommendations have a 60% success rate.

Adding related products to a pending purchase is a good way to increase not just sales but the average order value as well. Customers don’t mind buying one extra product if recommended correctly. The rationale is that they’ve saved money with a discount, and they were already prepared to spend the full price. One more product won’t hurt. Here’s an example from Amazon:

Allow bundle customization

Sometimes customers want more flexibility to customize their own bundle according to their needs, and Away Travel gets it. Away sells travel essentials like suitcases, bags, and accessories.

The company encourages the customer to create their own set by choosing everything from material to colors and sizes. This gives the customer the option to customize their luggage set as they wish. They can choose different colors and even add the option of having added accessories like a USB port. This level of customization makes the customer feel like they’re in charge and have freedom of choice.

At Upscribe we know how important flexibility and choice are to customers. This is why we provide bundling and build-a-box features. This will enable your online store to offer subscription bundle options to your customers with flexible non-restrictive options.

Here’s what you can do with the build-a box-feature:

  • You can set up different subscription boxes using various discount levels or pricing structures.
  • You can build product bundles on Shopify, including customized bundles.
  • Your customers can purchase bundles once off or subscribe for a bundle.
  • Sliding discounts are applied to bundles based on how many products the bundle has
  • Subscribing customers can change what products appear in a bundled product for alternative purchases. Schedule a demo to see it in action.

Remove buying obstacles

Improve chances of your bundle being a bestseller by removing buying obstacles. These are any reasons that would make a customer think twice about buying your bundle. Simple ways to remove buying obstacles are:

  1. Adding reviews

97% of consumers look at reviews before making a purchase. Make their job easy by having reviews or social proof that others have bought the same bundle and enjoyed it. FOMO will work in your favor.

  1. Money back guarantees

A Money-back guarantee gives your customer a good reason to click purchase. You’re basically telling them that they have nothing to lose by trying the bundle.

  1. Free shipping

If customers don’t have to worry about shipping fees, they’re likely to spend more. This will increase your sales and average order value. You could have a threshold like free shipping on orders over a certain amount so that it’s practical for you and the customer.

Done right, price bundling can be the growth catalyst that your business needs to achieve its goals. If you want more insights on how to optimize your online store, check out our blog.