With more competition and increasingly discerning customers to satisfy, retail brands must be innovative with their pricing strategies. They must pursue varied tactics and experiment with different models to get ahead, and one popular strategy is bundle pricing.
A data-driven tactic, bundle pricing involves grouping items into a single, cumulative price tag that is typically lower than the products would cost if purchased separately. It gives the customer a saving, while maximising their overall order value.
This guide looks at why is bundle pricing effective and how to implement it.
What Is Bundle Pricing?
Bundle pricing is a strategy in which businesses group – or “bundle” – items together and sell them all at a combined price. An everyday example would be a retailer in the consumer electronics industry selling a laptop, plus a carrying case and some helpful starter software, all for a single flat fee.
This can prove a viable and valuable strategy for retailers, because customers feel that bundles offer better value than buying products separately. As such, they are more likely to buy bundles, potentially purchasing items they may not otherwise have shown much or any interest in.
The retailer, in turn, enjoys larger sales and higher order values for every bundle sold, as well as possibly clearing out inventory or selling products that might have lacked interest on their own. In short, bundle pricing is a promotional pricing strategy that benefits both the buyer and the seller.
The key to making the product bundling strategy work is data. It is not merely a matter of picking a few products that are relevant to one another; to truly get value from this method, you have to pick the right products, at the right times, and set the most appropriate, data-backed bundle prices, too.
Examples of Bundle Pricing in Retail
Everyday bundle pricing examples include:
- Clothing stores that offer deals where customers can purchase several items for a bundle price, e.g., any two pairs of jeans for X amount.
- Electronics shops that offer a high-value device, like a phone, laptop, or computer, plus accessories, like a mouse, keyboard, software, and case.
- Cosmetics brands offering bundles of makeup or skincare items at a combined rate, encouraging customers to order more than a single, one-off item.
In all of these bundle pricing retail examples, the customer goes further if they spend the extra on the bundle rather than buying the items individually. As long as all the bundle items hold some level of interest or relevance, the overall package will seem like a superior deal for the consumer. The retailer, meanwhile, will benefit from selling more goods per customer.
Why Bundle Pricing Works for Retailers
Bundle pricing offers one clear benefit for consumers: they get more products for less. For retailers, there are numerous benefits, some less obvious but all of which can improve profitability and long-term success.
These include:
- Increasing the average order volume, with customers spending more in-store or online per order, which may aid with profitability and sales targets
- Improving customer satisfaction, as customers feel that the store is giving them a better deal than competitors may provide
- Helping with reputation and loyalty, as customers who benefit from smartly constructed bundles will be more likely to return to that retailer in the future
To get the most of these benefits, your bundle pricing strategy has to be intelligent and data-driven, because bundles can backfire if the wrong products are selected or the set price is too high or too low. Assosia’s powerful pricing tool and tracking services help support the most competitive and accurate pricing decisions.
The Role of Data & Insights in Effective Bundle Pricing
Successful bundling strategies are built on intelligence; thus, building bundles blindly is a recipe for disaster. You have to use data to determine which products to include and how to price your bundles to strike the right balance between profitability and widespread appeal.
Market, customer, and competitor data can all influence your bundling decisions, and there are plenty of tools available to help you gather and interpret relevant data. AI and price-monitoring tools, for example, help identify optimal product pairings, and with the right technology on your side, bundling becomes a much smarter, strategic approach, backed by facts, not guesswork.
Understanding Customer Behaviour
The more you know about your customers, too, the easier it will become to build bundles they want to buy. Tracking customer behaviour and buying patterns will help you identify high-runners and slow-moving products that you could combine to drive interest in bundles and move less-wanted stock. It also helps you see which products customers frequently buy together, effectively allowing your audience to build bundles for you.
Types of Bundle Pricing Strategies
While bundle pricing may appear like a relatively simple and uniform idea, it actually comes in several varieties, which include:
- Pure: This is when the products in the bundle can only be purchased in that bundle, not separately. So, if customers want one of the items, they’ll be more inclined to buy the whole bundle just to acquire it, seeing the other items as bonuses.
- Mixed: This gives the customers the choice to either buy items in a bundle or separately, but they will invariably get a better price if they go for the bundle. Consumers tend to appreciate the freedom of choice, so this method works well for improving their experiences.
- Custom: This method introduces even more freedom and flexibility into the mix by letting customers build their own bundles. The retailer offers them various options, and they choose the products that best match their exact needs and wants.
- Leader: This is when one popular, high-value, or in-demand good is chosen as the “main” product of the bundle, and other, “lesser” items are added on. This can help companies sell items that may not get much attention on their own.
Each strategy has its best use cases; for example, leader bundling often works well in electronics, while custom building can be effective in consumer-packaged goods or clothing retail. Brands are encouraged to experiment with different types and track performance to see which mode gets the most traction with their customers.
Implementing a Bundle Pricing Strategy
The following steps show how to build and deploy a bundle pricing strategy that works:
- Research: Data is vital for building bundles, so the first step is to learn as much as possible. Use relevant tools and services, such as competitor monitoring and price tracking, to identify the right products to bundle. Also, look into your customers’ interests and expectations to create bundles that grab their attention and address their needs.
- Product Selection: Use the data gained in the previous stage to start building one or more bundles. Remember to consider different types of bundle pricing, such as leader and mixed bundling, and choose those that best align with your audience and market.
- Promotion: People need to know about your bundles to understand the value they offer and actually purchase them. In-store, bundles can be highlighted with special displays and banners, while online, banners, ads, and featured sections all help draw attention to your bundles.
- Test, Monitor, and Iterate: You may not get bundle pricing quite right on the first try, which is why it is vital to test different ideas – i.e., deploy A/B testing with two different bundle options to see which one makes the most sales – and track performance. Use monitoring tools to assess how your bundles perform, gather feedback from buyers, and leverage retail data to consistently identify ways to improve your strategy.
Advantages and Disadvantages of Bundle Pricing
| Benefit | Explanation |
| Improves average order value, since more products are likely to be purchased by each customer. | Can eat into profit margins if the bundle price discount is too large. |
| Gives customers the impression of a better deal, which can help with retention, loyalty, and reputation. | Demands a careful and data-driven approach in selecting products and picking the right prices. |
| Simplifies the purchase process for customers, since it instantly gives them relevant, recommended products to complement their main purchase. | Excessive use or bundles that are simply not quite right for customer needs can lead to rejection or even frustration among consumers. |
How Assosia Empowers Retailers to Bundle Smarter
As mentioned throughout this guide, data is at the heart of every successful bundle pricing strategy, and Assosia is the tool you need to acquire that data.
A leading name in the retail intelligence space, Assosia provides a powerful pricing tool and related services, including retail auditing and competitor analysis, helping brands gain the information and insights to price their products more intelligently.
We can help you find the right products to build your bundles and the right prices to drive the maximum number of sales without sacrificing your profit margins. Contact our team today to learn more about how this works and take the first steps towards an effective bundle pricing strategy.