Price Bundling: Definition, Examples, Pros and Cons

According to Statista, total revenue for the U.S. retail market, with over a million retailers, exceeded $7 trillion in 2026. In 2024, global e-commerce sales from 26.5 million websites are projected to exceed $6.3 trillion.

In the extremely competitive retail environment offering discounts on goods and services can be a quick way to attract buyers. However, relying on discounts too often can lead to financial and reputational losses. A more sustainable approach is price bundling, which strikes a balance between offering customers a reduced price and boosting overall sales.

In this article, we explore the main features of a bundle pricing strategy and analyze examples, advantages, and disadvantages.

Contents:

What Is Price Bundling?

Types of Product Bundle Pricing

Advantages of Price Bundling

Disadvantages of Price Bundling

How Competitor Analysis Helps Optimize Bundle Pricing

What Is Price Bundling?

Price bundling is when several products are combined into a set and sold at a total price that is lower than the sum of their individual prices. This popular marketing tactic is often used to sell goods and services, creating a win–win situation for both the customer and the seller: the customer saves money, while the seller increases their sales volume.

Products in a bundle are positioned as a complete package to meet a specific need.

Products in a bundle typically complement each other. A multi-step skincare set from Fenty Beauty, a combo meal at McDonald’s, or a Lenovo laptop with Microsoft Office pre-installed are a few examples of related products combined to satisfy specific consumer needs: achieving beautiful skin, satisfying hunger and thirst, enhancing productivity. This approach not only improves the user experience but also boosts customer loyalty by offering convenience and added value.

However, bundled products can also be diverse. For example, OwlCrate, a book service specializing in fantasy, offers not only books but also related items like bookmarks, candles, mugs, and other themed accessories. This strategy provides extra value to customers, making the reading experience more interactive and engaging.

Overall, a bundle pricing strategy can benefit businesses of any size and in any industry, as long as their products complement each other, increase opportunities for use, or are frequently bought together.

Types of Product Bundle Pricing

Price bundling can take various forms depending on the company’s goals and customers’ needs. Let’s examine some of the main types.

Pure Bundling

With pure bundling, customers have only two options: buy the entire bundle or don’t purchase. If a consumer is interested in a particular item, the bundle might convince them to purchase the whole set. 

There are two types of pure bundling:

• Joint bundling involves combining several products from different suppliers into one package, allowing customers to enjoy discounts or other benefits by purchasing everything they need in one go. In this case, the connection between the products (e.g., shampoo and conditioner) adds extra value to the bundle.
• Leader bundling differs in that one product has a higher consumer value than the others. This leader product entices the customer to make a purchase. For instance, a smartphone can drive sales of accompanying items like headphones.

Mixed Bundling

Mixed product bundle pricing is more flexible because it involves selling the entire bundle as a single unit while also offering each component separately. Customers often perceive these bundles as more advantageous, since they see greater value at a lower price compared to buying the products individually. This approach effectively demonstrates the concept of consumer surplus (the difference between what a customer is willing to pay and the actual price), which is the foundation of a bundle pricing strategy. The perception of a discounted price appeals to customers, making the purchase feel more rewarding.

Advantages of Price Bundling

Price bundling has numerous advantages that can help companies increase sales, improve customer relationships, and manage inventory more effectively. Let’s take a look at the main benefits.

Revenue Optimization

A bundle pricing strategy allows companies to optimize revenue by increasing the overall sales value and reducing customer acquisition costs. It also helps raise the average order value.

For example, consider an online electronics store that offers a bundle including a laptop, a wireless mouse, and a backpack at a special price. This offer saves the customer time by eliminating the need to find all three items separately. In this case, the laptop acts as the leader (the item with the highest consumer value that drives sales of the mouse and backpack). Instead of buying only the laptop for $1,000, the customer buys the entire bundle for $1,200, even though these items would cost $1,400 if bought individually. As a result, the average order value increases from $1,000 to $1,200.

Efficient Inventory Management

Price bundling also helps reduce inventory of slow-moving items by mixing them with high-demand products.

Imagine a store selling sports equipment. In the Yoga Products category, a certain yoga mat is a bestseller, while elastic bands are slow-moving items. The category manager can bundle these products, helping to move the elastic bands faster and freeing up warehouse space for new items.

Promoting New Products

If you are trying to interest consumers in a new product, it’s easier to do so by including it in a bundle with something that’s already popular. Customers’ loyalty to the well-loved product makes them more likely to try the new one. Plus, the new product benefits from an immediate boost in consumer trust.

Attracting New Customers

If a bundle is attractive, it will expand the customer base. Primarily, it will attract a market segment that is unwilling to overpay. These consumers hunt for hot deals and may not have been aware of your brand before. The offer will also appeal to consumers who prioritize convenience and time savings, preferring to buy all-in-one solutions.

For example, consider a brand that makes both cosmetic products for moms and baby care items. They create a special starter package for mothers of newborns, including essentials for the first few months of the baby’s life and care products for moms. This starter pack can be featured on the brand’s website and social media as the perfect gift for new moms or an all-in-one solution for those expecting a baby.

Disadvantages of Price Bundling

Like any strategy, price bundling isn’t without its drawbacks. The good news is that they are few and can be avoided with proper implementation. Here are some of the disadvantages and risks:

• Reduced profit margins. When creating bundles, companies often provide discounts to make them more appealing to buyers. This can lead to reduced profit margins on individual items.
• Limited choice. This might lead to customer dissatisfaction, as customers may feel forced to buy items they don’t need. Therefore, it’s crucial that your bundle aligns with the actual needs of your target audience. A well-formed bundle should enhance the customer experience and not contain random items.
• Decreased value perception. If customers constantly see discounted bundles, they might start to believe that individual products should always be cheap and may not be willing to pay full price in the future.

Consumer behavior also comes into play. Buyers who value freedom of choice might avoid purchasing bundles altogether. Some consumers think bundle sales are just a way to get rid of outdated, surplus products. A well-crafted marketing strategy that highlights the benefits and value of the bundle can help change their minds.

How Competitor Analysis Helps Optimize Bundle Pricing

Any pricing strategy should be based on KPIs, internal performance analysis, and market analysis. Understanding the needs of potential customers is also crucial. Bundles are no exception. It’s essential to analyze competitors’ prices, promotions on similar products, and bundlings from other stores. This will give you a clearer understanding of market conditions and help you differentiate your offer. By creating a bundle with the right combination of components at the right price, you’re more likely to persuade consumers to make a purchase.

To ensure your bundle price is competitive, follow the algorithm below.

Calculate Bundle Profitability

Calculate the total cost of individual items in your bundle. Compare this with your bundle price to ensure sufficient profit.

For example, if the cost of individual items in your bundle is $60 but you sell the bundle for $50, you must consider all costs and profits to ensure that such a price is competitive and profitable.

Collect Price Data for Individual Items

Gather and compare data on competitors’ prices for individual items in your bundle.

If you are already using the Pricer24 platform, you don’t need to collect data manually. The price parser will do it for you.

Compare Prices

Compare the price of each item in your bundle with similar items from competitors using a product search.

To do this in Pricer24, open the Price Comparison report. The system automatically matches your pricers with competitors’ prices, and with just a few clicks, you can display ready-made analytics on your screen.

Analyze Competitors’ Promotions

Analyze the promotions and discounts that competitors are currently offering on individual items in your bundle. Check if your bundle is more advantageous for the customer than buying two items separately from another seller.

• Example 1: You notice that certain products are sold together at a discounted price by competitors. You can create similar combinations in your bundle or include additional products to provide customers with more value.
• Example 2: If competitors offer discounts on item X but not on item Y, you can include item Y in your bundle without discounting it but still offer an overall discount on the bundle. This can be an effective strategy to draw attention to your offer.

To compare your bundle’s promotions with those offered by competitors, use the Market Analysis report in Pricer24. This report will show you which items competitors are focusing on, their promotional prices, and brief descriptions of their promotional conditions.

Optimize Pricing

Based on the collected data, review your pricing strategy. Consider adding new items to the bundle or adjusting discounts to improve the price-to-quality ratio.

Review and Adjust

Assess the market’s response to your bundle. Adjust your bundle pricing strategy as necessary to maximize attractiveness for consumers and competitiveness.

It will help you create bundles that are competitive and appealing to customers, align with market conditions, and give you a competitive edge.

FAQ

Which companies can use a bundle pricing strategy?

Any business, including small and midsize ones, can successfully use a bundle pricing strategy if they have complementary products or items that enhance the user experience when combined.

Is price bundling relevant only for products or also for services?

The price bundling strategy works well for both products and services. For example, a spa can combine a hammam service, massage, and tea session into one offer.

How should the bundle differ from what competitors offer?

A bundle that costs less than competitors’ offers and includes valuable, unique content tailored to customer needs will attract buyers.