How to use Product Bundle Pricing to Increase Conversions and Make More Sales

If you subscribe to a service from a link on this page, Reeves and Sons Limited may earn a commission. See our ethics statement.

Admit it. You’ve bought something before because it was part of a bundle—even though you’re not quite sure why. That’s the result of bundle pricing strategy, and it has a powerful effect on how we humans tend to think at the point of purchase.

A bundle pricing strategy is simple: it adds products together, often in an ecommerce setting, and it creates a more tempting offer with dynamic pricing. Whether you’re launching new products or pushing your most popular products along with the less-popular products, product bundle pricing can make your ecommerce store that much more effective at squeezing more average order value (AOV) out of every purchase.

But let’s get more specific about product bundle pricing. What is it exactly, and how might you use this strategy to encourage people to make the purchase you want them to make? And how do you make sure that your profit margins remain high, even when you offer a lower price when multiple products are sold as a bundle? In this article, we’ll explore the different product bundle pricing strategies you can use to get more out of your store.

What is Product Bundle Pricing?

If you’ve ever bought a “value meal” at a fast food restaurant, you know what the power of product bundling can look like.

Also known as price bundling, product bundle pricing is what happens when you take two or more individual products at different prices, then sell them for a price different than their initial pricing’s sum. For most customers, that means getting a discount. Think of product bundle pricing as a way to “nudge” your customers toward making an additional sale.

Let’s take an example. Imagine that you’re at home, shopping on Amazon, and looking for a general cleaner spray you can use for your kitchen. You see a cleaner spray is available for $5. But then you see additional products offered as part of a bundle: a broom and some cleaning gloves. Well, you figure, those relate to what you want to buy. And it looks like if you were to buy this bundle together, you’d save $10 off the list price of all three items combined.

Now let’s say that you clicked “order.” What was initially a $5 purchase has suddenly become a $35 purchase. Yet you, the customer, feel happy for two reasons:

  • The product bundling made sense. You were interested in cleaning products, after all. And the product bundle the website recommended to you simply offered more cleaning products. This is what makes product bundling so effective. It essentially tries to “upsell” or “cross-sell” you at the point when you’re most likely to purchase.
  • You found yourself a bargain. The favorable pricing you found as a result of the bundle is indeed helpful. Rather than pure bundling, without any change in pricing, this group of products is less expensive when bought together.

When you hear it framed like this, you see product bundle pricing for what it is: a smart, sneaky way to cross-sell. But you can do it in a way that customers not only fail to notice the extra sale, but they’re happy you sold it to them.

Remember that you don’t have to limit this to new products—or products at all. You might offer services or subscriptions at your company. In the same vein, you can use higher-priced (but value-packed) bundles to get people to buy more from you. This doesn’t have any effect on the perceived value of your services, since those individual services may still be listed without the bundle. But by using value-packed add-ons for your services, you can similarly “nudge” a prospect over the edge.

It’s wired in us: when we see a discounted price, we might not buy, but you almost always have our attention.

illustration of a cat climbing a ladder

What are the Different Product Bundling Strategies You Can Use?

From value meals to large-scale, B2B services, product bundling makes sense because it reframes individual items as bargains. But how do you know what kind of product bundling strategy to use? Heck, what are the best types of bundling strategies available to you? Below, we’ll explore some of the key strategies you might want to employ:

  • Pure bundling. A “pure bundle” takes place when you sell a product only when purchasing another product. It’s this sense of exclusivity that potentially drives sales. You should mainly do this when you have a keystone product you want to sell. For example, a video game console might have a specific add-on, such as additional memory. If you only sell the additional memory as part of a package deal with the console, then you’re engaging in “pure bundling.”
  • Joint bundling. This is the “value meal” approach with which so many consumers are so familiar. In joint bundling, you’ll bring together two or more products together at the same price within a single offer. Unlike with pure bundling, these products can be sold individually as well. Think about a shampoo and conditioner product bundling, for example. It makes sense because the two products are related. Yet it’s perfectly reasonable to buy one or the other on its own as well.
  • Product leader bundling. Also known as “leader bundling,” this is sort of like a combination of pure and joint bundling. Let’s say your marketing strategy is to focus on the main product in a campaign. Yet you still want to use the power of bundling to drive sales to that product. You can select add-ons to this product by adding accessories to a bundle. This will still add on to the price, but not as much as if the customer were to buy the accessories separately. This creates additional incentive to buy the product leader, while also increasing your average order value.

Any one of these three strategies can be effective. The key is selecting a price point that makes sense for you. Your type of product will impact the types of bundle you ultimately go with as well. To increase your average order value, consider the types of products you’re working with, pursue this list of bundle pricing options, and you’ll likely know within a few seconds which setup is best for your customers.

illustration of a cat climbing a ladder

The Benefits of Bundling Pricing—And the Potential Downsides

The point of purchase is the most unique opportunity anyone in ecommerce will ever have. Imagine your customer sitting in front of their computer or phone. They’re at the checkout page. Their credit card is out. Suddenly, they see one of your bundling offers.

Next, they figure, hey, why not—I need that item anyway and this sounds like a nice deal. Voila. Your bundling offer found a way to boost sales. Bundling works, when you do it right.

But what are the specific benefits of bundling pricing, and the potential downsides? Let’s start with some specific benefits.

The Benefits of Bundling Pricing

Average order value. Let’s say that your business is doing well. You attract plenty of customers. You convert plenty of website visitors into paying customers as well. But there’s one thing that you can’t quite put your finger on that’s bothering you: customers just aren’t spending enough money.

One way to address this is to look at the average order value you have. Then use a strategy like bundle pricing to address it. Bundle pricing encourages upsells and cross-sells at the point of purchase. This, in turn, leads customers to buy more. They might have initially thought they’d purchase one item, sure. But now that they see a bargain put right in front of them, they’re happy to buy some more.

The result: higher AOV, which affects your company in all sorts of positive ways.

Moving inventory. Sometimes, your motivation isn’t necessary to increase AOV, but to get some value out of your existing inventory. You don’t want to create an individual product sale that gives your items away, as that might lower the perceived value of all the products at your store. After all, a customer might figure: “Hey, if these other products are available at such a reduced price…why don’t I just wait until the next sale?”

This creates a problem. Your inventory moves, but you’re charging so little for it that you’re essentially becoming a consumer surplus store.

Bundling allows you to sell items at a discount without affecting your perceived value so much. The customer experience is to look at the bundle and evaluate it as a rare bargain for buying more, so they’re not too concerned about one individual product’s value. Now they’re considering the overall purchase as a group.

The Disadvantages of Bundle Pricing

Price. Simply put, offering unique and discounted bundle pricing is going to cut into your margins a bit. That’s not necessarily what you want to hear, because ecommerce is all about the bottom line.

After all, you might figure, what’s the point of increasing AOV if it decreases profitability?

That’s why you should look at bundle pricing for what it does accomplish. It can encourage customers to make an additional purchase, a bit like a cross-sell. It can increase your average order value. And when you convert visitors into customers, it has the potential to increase statistics like your ROAS, or your return on ad spend.

Customer preferences. Ever see the movie “Father of the Bride”? In it, Steve Martin’s character is starting to feel stressed out about an upcoming wedding. Finally things come to a head when he encounters buns and hot dogs sold in separate packages. He tries to remove some of the “superfluous buns.” But he’s ultimately confronted by the grocery store staff and taken to jail.

Maybe every customer of yours won’t end up like Steve Martin’s character. But they can sometimes feel the same way. Sometimes, customers can get frustrated when there’s no other way to make a purchase than to buy it your way. And customers like having options. If you want to enhance the customer experience, a good way to approach bundling pricing is to offer it as an option, but not as an exclusive option.

Amazon is very good at this, as they provide bundling suggestions without necessarily forcing you to make that purchase.

illustration of a cat climbing a ladder

Strategies for Determining Product Bundle Pricing

Maybe you’ve read all the above and are convinced that this is a great way to increase your AOV. Great. But that leads to the next question: what now?

The first step should be to look at some of your bundle pricing opportunities and see where you can put together bundles that make sense. For example, a hamburger and fries with a drink make sense—people are at a fast food restaurant to have a meal. Putting together an entree, a side, and a soda is the slam-dunk bundle that we can all relate to.

Your bundles may not be so obvious. So let’s look through a few strategies of handling product bundles to help clear up what may seem complicated.

Bundles for Integrations, Add-ons, and Accessories

The first place to look is for the products that don’t necessarily fit everyone’s mold, but do fit each other’s. For example, let’s say you sell desktop computers—bundling a computer with a monitor makes sense. If you sell video game consoles, bundling that console with accessories like a video game chair also make sense.

Yet if you run a store that sells all sorts of items, then it might not make senes to bundle that video game console with an action figure. Sure, they’re both essentially toys—but they’re typically aimed at different age groups. And someone with an interest in video games may nto have the same entertainment preferences as someone playing with action figures.

The best way to find out if you have an opportunity for this type of bundle is to look for the products that you want to highlight. Consider why someone is buying that product, then look at the other products that might fit with it.

Retailers may have to look around a bit to find the individual products that will make the most sense for bundling. But if you give it a go, chances are you’ll find something. And it will be something that connects with customers, too.

Bundles for Moving Inventory

Let’s be honest: it’s not always about selling products as a package. You might instead want to use mixed bundling to move inventory, encourage people to buy your products, even if you aren’t combining the most complementary products possible.

Try to find “themes,” however, which make mixed bundling make more sense. Stick to products that have the same rough demographic targets, for example. Or simply combine best-sellers and let customers know that a product is selling well. Sometimes, the social proof of knowing that other people are buying a product is just as important as an elegant pairing.

Examples of Product Bundling in the Market

Now that we’ve explored the benefits and strategies essential to making bundling pricing make sense for you, let’s talk examples. What might a product bundle look like? And what are the most logical product bundles that tend to sell well on ecommerce sites?

  • Same product, different versions. Sometimes, a clothing store may sell “black, white, and grey” T-shirt sets. These are ideal for anyone who wants to stock up on fashion essentials. And while different colors might not make sense as a pairing right away, this makes sense. Someone shopping for an ordinary white tee may be the frugal type who wants to find clothing items that match with all sorts of other combinations. If someone is buying a basic item like white T-shirts, for example, you might also consider throwing in a pack of socks. After all, the customer looks like they may be stocking up on the fashion basics.
  • Other bestsellers. Although not all pairings make sense, you can push some additional sales by noting when customers have also bought a similar item. The items don’t even have to be that similar when you mention that “customers also bought…” For example, let’s say you’re selling books. A customer buys a fantasy book. Might they like sci-fi? You don’t know, but if you mention that “customers are also buying these bestsellers” and you offer them in a bundle, they might be willing to give it a try.
  • Product sets. Shampoo and hair conditioner in a set. Face soap and hand soap. Bathroom towels and beach towels. Some pairings simply make sense. And you’ll likely find that if you go online to buy any one of these items, the website you’re buying from may try to push that additional product on you to boot sales.

Product bundle pricing means giving a discount when someone buys more than one item at your store. From there, you’re free to pick the ideal matching of items to potentially push those items and make more sales. Try to incorporate intuitive strategies when you can, but remember the reason many people buy bundles: they’re looking for a way to save money.

Sergio Costa

Sergio teaches entrepreneurship and innovation at various levels (BSc, MSc, MBA, PhD) mainly at the University of Bath, Imperial College London, Warwick Business School. He has published research on the Journal of Business Venturing and leading management conferences (AOM, SMS, Babson, BAM).

Comments 0 Responses

Leave a Reply

Your email address will not be published. Required fields are marked *

Rating *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

shopify light modal wide - this exclussive deal expires
shopify popup new