Advantages of bundle pricing
Ease in making the purchasing decision: When a company offers a combination of different products, all in a single package, this helps the customers achieve their objectives and helps in making their buying decision, simpler. Rather than anticipating what product they should purchase and which not to purchase, bundle pricing helps the customer in purchasing more products at a cheaper rate, which in turn, helps the company in increasing their sales.
Helps in increasing overall sales: When the companies opt for such a strategy, they basically assume and have the motive of increasing their profit margins. They do this as customers are tempted to make a purchase of products which are in a bundle. In this way, the sales of the company increase as they sell more units of products in a single bundle. Thus, the company provides products which are supplements of each other, earning them support from their customers, who end up returning to purchase more products from this company.
Increase in the sale of lower-volume items: For certain products or items that fail in meeting the expectations of the consumers, this strategy helps in increasing their sales. The kinds of products which were not often bought by the customers can be grouped with the products which are preferred more, by the customer, in the form of a bundle. This steadily increases the sales of items which were harder to sell.
Drawbacks of bundle pricing
Clients may want to purchase each product, separately: There are people who like to make their own choices and don’t settle on choices made by the company. Making a bundle of goods may lead to a negative effect on the purchaserâ€™s mindset and they may end up purchasing nothing, only to avoid a forced purchase of extra items. So to capture high purchasing power, companies need to provide their clients with exactly what they want. Items included in the bundle may be of use for some and may be of wastage for others. Thus, targeting the needs of every customer is made a bit impossible through this strategy, as preferences of customers always differ.
Types of price bundling
Pure bundling is where two products can be sold only together and any of them cannot be sold individually.
Mixed bundling means selling off products as per the desire of the customer. That means customized products are sold. This type of bundling generally has a higher cost, as there is a likelihood of purchasing the item that is greater and it caters to oneâ€™s own choices.
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