Tip: Pricing Bundles Should Feel Like a Deal

Tuesday, November 10, 2015

Product bundles are powerful. They can encourage consumers to spend larger sums of money. Some companies use bundling for strategic reasons, but bundles typically reduce the overall cost of the bundled items in order to incentivize consumers to make a purchase. Here's an image from a bundled offer on Groupon. Can you spot something strange?
The pricing bundle isn't very enticing
If you noticed that this is one of the least compelling bundles ever, pat yourself on the back. You're right! Folks who buy the bundle receive $1 off - a 1.4% discount from the unbundled price. Do you really think a 1.4% discount will drive many sales? The price reduction represents income that the firm is giving up without reason. Customers won't be jumping for joy at a $1 discount. Rather, they'll be annoyed with the brain power they're forced to waste evaluating the merits of this bundle. If the company really wants to push customers to bring their friends, they should consider adding something of value to the bundle. A free token item (like a weapon-themed keychain) or a discount on future purchases would be a stronger incentive for customers to find another person to take to the class. In the case of the discount, it might even spur additional profits (that need not be shared with Groupon). As I tell everyone (especially those who sell firearms), don't shoot the messenger. I'm just trying to help. Need some assistance correcting your pricing strategy? Contact us for a consultation.