Why sell only one product if there is an opportunity to send more?
Regardless if you’re an eCommerce novice or an experienced store owner, you know that the profit increase depends on the increase in your average order value.
One of the best ways to achieve that is through bundle pricing.
Bundle pricing is one of the pricing strategies that you must have heard of. It works pretty simply – different products are combined and sold together by a combined price. You may ask how is that different than customers combining the products on their own? Well, the difference lies in the fact that this pricing strategy has a psychological and economic effect on the customer. The customer will perceive it as an opportunity to get a hold of a great deal – more products at a lower price.
In this post, we’ll go over some of the most important benefits of bundle pricing and also we’ll discuss the 5 ways in which you can use bundle pricing in eCommerce.
What are the benefits of using bundle pricing in eCommerce?
As we said, bundle pricing first of all creates a psychological effect. Your customers will take less time to make purchasing decisions. Also, this pricing strategy will make comparing prices with competitors harder since you’re not selling only one product. Therefore, the customers will perceive shopping with you as more valuable and beneficial.
All these aspects will consequently affect your profits. Your order value will most likely increase, and therefore your profit margins as well.
Main points of the bundle pricing
The most obvious thing – the bundle price must be lower than the combined prices. In other words, customers must recognize some sort of discount to proceed. If that’s not the case, then what is the point? Usually, this means that the bundle price should be lower for about 10%.
You need to have a very clear idea of who your customers are. With bundle pricing, you’re not aiming for buyers who for example have no problem with buying expensive or luxury items. You’re aiming mostly for the ones who are debating their purchase. The conversation in their heads goes something like this: “I need X product, and I’m able to pay for it. However, there is also Y available but I shouldn’t be spending too much money right now. Oh, but look at that, spend $60 and you get 10% off? I might use this discount offer now”.
The most important thing when it comes to this pricing strategy is that customers have to find it understandable. You can’t just combine products randomly without any sense. The customer needs to find that combination logical. Therefore, you can not only rely on the fact that you offering a discount. Saving money is an important factor, but it won’t make much of a difference if the customers can’t see any additional benefit.
5 ways to use bundle pricing in eCommerce
Now that we covered the basic and most important things about bundle pricing, we can proceed with explaining the 5 main ways in which it can be used in eCommerce.
There are different techniques that you can use depending on the product types that you have.
Pure Bundling – means that there is a group of products that are meant to be bought together, so there is no option for separating them. One of the most common examples of pure bundling is the one that television companies use. They prepare different packages among which people have to make a choice. They can’t just choose whatever channel they like – the channels are already defined in the packages that a certain television company has to offer.
Mixed Bundling – can be a double edge sword to you. It means that you offer bundle products, but the customers have the option to get any of these items on their own. It’s risky because they can decide to buy only one product in order to spend less money. Yet, you’ll still be selling at least something, so that’s always better than selling nothing at all.
New or Unpopular Product Bundling – this type is to some extent connected to the previous one. You can use more popular items and bundle them with the unpopular ones. But, as we said, you need to keep in mind the customer’s logic behind the purchase. Don’t just combine anything and everything but instead try to understand what items the customer would like to buy together. Doing this will help customers become aware of products that they might have missed. In the end, they will be glad about their purchase.
Bundles you don’t think are bundles – this is a common situation in the fashion eCommerce industry. Let’s say you want to buy an outfit – naturally, you’ll be looking for multiple items. That is a unique opportunity for eCommerce retailers. They can bundle different products and offer them to you for a lower price. You’re for sure familiar with this – whenever you visit some online store and pick an item, it automatically offers you a few more that would make a great outfit combination.
Cross Company Bundling – as the name suggests, this means that the items from different companies are offered as bundle products. If your company is collaborating with a new partner, this is a nice opportunity to introduce it to customers. The only important thing is that the items are complementary. In that way, customers will be glad to try out something new and learn about the product that they’ve never used before.
Wrapping it up
The eCommerce market is nowadays exposed to a variety of different pricing strategies. There is no magic recipe that will bring you instant results, but you’ll have to test out a few things to find out what strategy works best for you. However, one of the strategies with which you can not miss is bundle pricing. Bundles, when done right, will bring you great results in terms of increasing revenue and improving average order values.
What is your opinion on bundle pricing? Leave a comment below.