Bundle pricing is a strategy in sales that includes the offer of multiple complementary products and/or services together in a package for a discount.

Think streaming services.

The last few years the majority of the major streamers are independent service providers and need to be purchased and subscribed to as such.

Recently, they’ve started to bundle together to save people money and make more sales. Win/win.

Let’s hit some of the highlights and lowlights of using this approach.

Advantages of bundle pricing

• More affordable marketing: when you combine multiple products as one, it cuts down on multiple individual marketing initiatives.
• Easier for customers: providing a few options with bundle pricing can help customers who are torn between options to choose faster, when they can have them all for one lower price.
• Higher volume: bundling offers tend to drive sales and increase your bottom line.
• More for less? This boosts customer satisfaction and retention.

Disadvantages of bundle pricing

• Possibly seen as less value: this one can go either way. Some people see bundling for a lower price as a great value, others can see it as the individual products being worth less and that’s why they’re being bundled. It’s important to be strategic when it comes to pricing and promotion.
• Thinner margins: Bundles can sometimes lead to reduced profit margins, depending on product bundle pricing.

How is bundle pricing used?

There are a few different types of bundle pricing:

• Pure bundling: when certain items are only available as a part of a bundle.
• Mixed bundling: allows customers to purchase things either individually, or in the bundle.

More sales volume and optimized revenue, anyone? 

Here’s how bundle pricing is applied across various sectors:

B2B (Business-to-Business)

Businesses often see bundle pricing in the B2B market for complex products that boost operational efficiency.

For example…

• Software Suites: A software provider might bundle project management, communication, and analytics tools together at a discounted rate. Microsoft offers Office 365 as a suite of interconnected tools.
• Hardware and Services Bundles: An IT company might sell hardware (servers) with maintenance services as part of a single package to persuade more customers to choose this option as it has higher value to them

Advantages in B2B:

• Makes it easy for clients to get what they need.
• Encourages you to buy related products.
• Enables businesses to offer clients premium packages, leading to longer-term contracts.

B2C (Business-to-Consumer)

In the B2C market, bundle pricing can be used to promote add-on purchases or help move inventory.

For example…

• Retail: Think of the checkout line at a store like Sephora. While you wait in line, they have intentionally put bins throughout filled with smaller products. This is to incentivize you to buy more while you wait.
• Technology: Electronics companies like Apple offer discounts on accessories (cases, chargers) when bought with a primary product like a laptop or smartphone. Sometimes they’ll even exclude a necessary product to get you to purchase it as an add on, because you’ll need it.

Advantages in B2C:

• Encourages customers to try new products.
• Higher sales volume.
• Can stand out by offering different bundles.

SaaS (Software as a Service)

SaaS companies heavily rely on bundle pricing to cater to diverse user needs and budgets.

For example…

• Tiered Bundling: SaaS companies use tiered pricing, bundling features and service levels into multiple plans like “Basic,” “Professional,” and “Enterprise.”
• Cross-Solution Bundles: Bundling CRM with marketing automation tools, as seen in Salesforce’s offerings, is a common approach to pair together products and services in an upsell.

Advantages in SaaS:

• Gets more people to try additional software through bundle discounts.
• This can lead to higher rates of customer retention.

Psst! Having a clean and clear sales process can make or break your bottom line.

Take for example our client success story with Newton Offices.

PandaDoc has been a fantastic addition to our business, significantly improving how we handle document management. As an IT Manager, it’s crucial for me to ensure efficiency and security, and PandaDoc delivers on both fronts. I love how I can seamlessly create automated quotes and send them to customers across multiple platforms in France. The collaborative workflows and easy-to-use interface make everything so much simpler. Their robust security and compliance features give me peace of mind. Overall, PandaDoc has boosted our productivity and streamlined our processes.

Titouan PetitIT Manager at Newton Offices Manco

Examples of bundle pricing

Let’s take our initial example of bundling through streaming services.

Disney+ offers this a variety of ways, including other streamers like Hulu, Max, ESPN+ and even an option for live TV.

Individual prices will be higher, risking a loss of sales. A price bundling strategy allows you to combine your package a number of ways to appeal to a broader customer base and attract new customers.

Bundling can also come in the form of an add-on at a discounted price, for example a “complete the look” option when checking out with a retailer.

Or, a crowd favorite, BOGO (Buy One Get One) which can be applied to anything from fast food to clothes to SaaS and more.
In a report, 66 percent of shoppers say that they like BOGO the most out of all discount promotions.

Benefits of bundle pricing

Bundle pricing offers businesses several key advantages that make it a valuable marketing strategy across industries.

We previously touched upon price optimization, which is when a business strategically packages and prices products to get the most sales possible.

The higher the value of the bundle, the bigger the boost in sales.

By grouping high-margin and low-margin items together for one, more appealing combo option, bundles can beef up revenue while offering discounts. What customer doesn’t want that? 

Bundling helps to increase a customers’ likelihood to buy because it makes sense to get two or more products for a lesser price than purchasing them individually.

Let’s back it up with some research:

69% of consumers prefer bundle options when it comes to subscription services (such as bundling streamers, for example)¹

Bundling also simplifies the buying-decision-process for customers.

This helps take away decision overwhelm when it comes to shopping, while enhancing the customer experience. What else comes from this?

Well, it helps to build trust, as buyers feel confident that the bundled items will work well together or meet their needs more easily than having to buy several things individually or come back for more down the line (likely after some frustration).

By encouraging customers to purchase multiple products at once, bundles boost the average transaction value and can help clear excess inventory by pairing slow-moving items with popular ones.

Over time, customers who experience value through bundled deals are more likely to return, fostering loyalty.

Disadvantages of bundle pricing

Alright. We’ve covered the what, the why, and the perks. We’d be remiss if we didn’t give you the whole scoop, including potential downfalls with this approach. So, let’s get to it.

One major drawback is the potential for reduced profitability.

I know, you’re thinking all of this blog so far is about more more more when it comes to revenue with this approach, right? 

Well, yes…however, if bundles are not priced well, then the discount may have a negative impact on the bottom line.

Especially if customers would have purchased the products individually at full price. Say you’re bundling high-demand items with less popular products.

This can risk diluting the perceived value of the package, leading to missed revenue opportunities. 

How do you know if your bundles are hits or misses?

This typically occurs when the bundled products don’t align with customer needs or preferences. Remember, everything needs to be done with the customer in mind.

Another downside of bundle pricing is that it can sometimes create customer dissatisfaction or confusion, particularly if buyers feel forced into purchasing items they don’t need or want.

For example, if customers only require one component of a bundle but must buy the entire package, it may lead to frustration or deter them from purchasing altogether.

This problem worsens when customers are unaware of other choices or can’t purchase individual items, potentially harming brand loyalty and trust.

You might face operational hurdles when putting bundle pricing into practice and managing it.

Businesses with limited infrastructure or data analytics capabilities may struggle with the resource demands of tracking bundled inventory, forecasting demand, and calculating accurate pricing for various combinations.

What’s worse?

Bundles can lead to surplus inventory of specific items if demand for one component exceeds that of others.

Careful planning and execution are essential for logistical issues, as mismanagement can harm the overall success of the pricing strategy.

Product bundle pricing strategy

So, is bundle pricing right for you? It depends on the type of products you’re offering and whether or not a package deal makes sense.

Let’s simplify it.

You walk into McDonald’s, or any other fast-food restaurant, what do you see on the board? Single price items, like a hamburger or fries, and of course, value meals.

These tend to be best-sellers and help with the customer’s purchase decision.

If you’re offering different products or services at different prices, that complement one another and would appeal to customers, then it’s something you should consider to boost sales.

This can be a great way to move excess inventory, introduce a new item and bring awareness to it, or simply make more sales when you bundle items.

Someone signing up for a streaming service likely isn’t only using just that one.

If you’re able to offer bundles for two, three, and more streamers, it’s likely going to appeal to a significant amount of customers and increase sales while maintaining customer loyalty and longevity.

PandaDoc CPQ

CPQ (Configure, Price, Quote) software is an excellent tool to maximize your pricing strategies.

With the ability to generate fast, accurate quotes from your CRM database of customer information, to setting approval workflows, PandaDoc CPQ is a game changer.

CLIENT SUCCESS SPOTLIGHT:

With the implementation of PandaDoc CPQ for HubSpot, HAAS Alert has not only saved an impressive 120 hours each month but has also significantly reduced errors in their quoting process. This newfound efficiency has allowed the sales team to focus more on closing deals, enhancing customer interactions  and improving their overall sales performance.

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