Smart Price Bundling Strategies for Shopify Stores to Boost Sales

Price bundling is essential for increasing customer spend, profit margins and loyalty - but easy to get wrong if products or deals seem irrelevant. This guide details various strategic bundle types and composition best practices based on your catalog strengths and shopper behavior. Impact your bottom line by better leveraging price bundles to motivate bigger, bloat-free orders of complementary products.

Quick Answer: Price bundling refers to selling multiple products together at a discounted rate compared to purchasing them separately. It's an effective strategy to increase customer loyalty, order values, and profit margins. Ideal bundle components have complementary utility and pricing models ensure sufficient margins across purchase volumes.

Types of Price Bundles:

Types of Price Bundles

Pure Bundling

Pure bundling refers to the practice of selling products solely in predefined combo sets or packages, rather than offering items individually. With pure bundles, companies determine which products to bundle together and customers can only purchase those fixed one-offering packages.

A common example is value meals at fast food restaurants. Rather than ordering food items a la carte, customers can choose set meals like a burger, fries, and drink bundle. Other instances are family mobile plans that offer a fixed number of lines and shared data. Companies like Amazon also offer packs of related digital services like the Prime Video channel add-ons. These are pure product bundles since consumers can only buy those preconfigured offerings.

The benefit of pure bundling is companies can maximize sales of less popular items paired with more popular ones. It also simplifies the purchasing decision for customers when products come in pre-arranged single-option packages.

Mixed Bundling

In contrast to pure bundling, mixed bundling provides buyers the flexibility to purchase items separately or in bundle deals. So companies still create predefined multi-product packages, but also make those same constituent items available individually.

For example, fast food combos can be ordered as-is or customers can customize their order. Mixed bundling is also very common in retail stores where related products are shelved together and offered at a discounted bundle price, even though shoppers can pick individual items if preferred. Amazon utilizes mixed bundling frequently, like allowing customers to buy a Kindle + cover + charger kit or buy just the Kindle itself.

Mixed bundling meets the needs of diverse customers - those wanting simplicity can buy the bundles while bargain hunters can cherry pick. It does require more complex pricing models and inventory management versus pure bundling.

Quantity Discounts

Beyond bundling different products together, companies can also bundle bulk quantities of the same item. This quantity or tiered pricing means customers pay less per unit when purchasing larger volumes, incentivizing higher spending and reducing per-unit costs for businesses.

A everyday example is soda sold cheaper by the case than individually or laundry detergent priced lower for jumbo containers. Warehouse stores commonly offer graduated pricing since shoppers buy goods in volume. Some quantity bundles feature small incremental differences like cereal boxes in 10 oz vs 15 oz sizes while others have more dramatic leaps like restaurant small vs XL sodas sizes.

Graduated pricing allows flexibility for customers on tight budgets while letting big spenders save. It also benefits companies through supply chain efficiencies and guaranteed sales volumes. The main downside is additional SKUs to manage and preventing too much revenue loss from extreme bulk discounts.

Benefits and Risks of Price Bundling:

Benefits of Price Bundling

Customer Retention

Price bundling can be an extremely effective strategy for improving customer retention rates and loyalty over time. By offering discounted multi-product bundles, companies incentivize shoppers to make repeat bundle purchases rather than one-off individual item orders. This cultivates longer-lifespan and higher lifetime value users.

Bundles essentially "lock in" customers to some degree, as they keep coming back to replenish their haul of products. Fast food combos drive return visits for example, while Amazon Prime bundles recurring membership fees with continual use of streaming media and free shipping services. The more customers repurchase bundles, the more loyal they become to that retailer.

Beyond loyalty dividends, tailored bundles also foster emotional connections and convey that companies understand their buyers' needs. Thoughtful bundles demonstrate genuine value - a commitment that earns customer retention.

Bigger Order Values

An obvious yet critical advantage of bundling is the ability to directly increase average order values. Simply put, customers spend more when buying bundles of items together compared to buying a single product alone.

Order value leap considerably with deep quantity discounts, as people stock up on more units. But multifaceted bundles also jack up tickets. For instance, a shopper might buy a $100 Kindle by itself, but bundling it with a case and charger boosts order value to $150.

Upsizing order values is hugely impactful for profit margins. Not only does revenue rise with pricier transactions, but the relative overhead costs of acquiring and fulfilling each order goes down.

Reduced Inventory Costs

Lastly, bundles provide an effective tool for clearing out stale inventory while reducing carrying costs. Companies can package together slower-selling items with hot products and discount the kits to quickly unload overstocks.

For example, retailers can bundle a popular phone charger that sells consistently with cases that have accumulated. The kit incentivizes purchase of the backlogged cases. Similarly, restaurants can bundle appetizers or sides that may go to waste with entrees to ensure they sell.

Promotional bundles liquidate inventories that otherwise require ongoing storage and management costs. They turn pending write-offs into sold stock and cash. Better overall inventory velocity means lower overhead burdens.

Potential Risks

Perceived Discounts

One risk associated with pricing bundles is the potential for customers to view bundled "deals" as deceptive rather than truly discounted. Shoppers have come to expect a barrage of fake sales and inflated MSRP claims. This makes them skeptical of comparative value claims.

If consumers believe bundles don't offer "real" savings versus buying items individually, they may feel manipulated into overspending. Damaged trust not only hurts future bundle uptake but the retailer's overall integrity.

To avoid this, retailers should bundle products with obvious complementary utility and make savings versus individual purchase clear. The goal is conveying how the bundle adds more genuine value than the customer can realize on their own.

Pricing Complexity

There's no doubt that calculating optimal pricing for bundles can be extremely complicated compared to setting single product prices. Retailers need to walk a thin line between discounts that compel customers and sustain profit margins across fluctuating manufacturing and inventory costs.

Modeling bundle pricing involves multivariate testing and consideration of factors like: manufacturing/supply chain economies of scale, willingness to pay for different item combinations, cannibalization rates of individual sales, and targets for inventory velocity or dollar sales.

Getting bundle pricing wrong can either sink potential profits if too low, or result in bundles that consumers don't find valuable enough to purchase if too high. The complexity also multiplies with numerous product variations and combinations.

Margin Compression

A big risk, especially for steep quantity discount bundles, is severe margin compression. If bundles are not priced judiciously based on per-unit costs across various order volumes, profits can quickly diminish.

For example, a retailer may offer a small soda for $2, medium for $3, and large for $4. But the large soda may only cost nominally more to produce than the small. If priced at $4 already, bundling 2 larges for $6 results gets perceived as a deal by consumers when it eats into profits significantly.

Without careful modeling, bundles can too deeply discount high-margin items in exchange for spurring volume sales of low-margin components. The result is a revenue bump but with less income cushion per transaction.

Ideal Products to Bundle

Complementary Products

The most intuitive and effective bundles feature products that complement one another - ones that consumers tend to purchase together already. These might satisfy joint needs, enhance functionality collectively, or share close usage occasions.

Common examples are kitchen appliances like blenders and appliances (spatially paired), phone cases with screen protectors (function pairing), or french fries and burgers (usage occasion pairing). Identifying natural product complements allows creating bundles perfectly tailored to known customer needs.

An ancillary benefit is the heightened perceived value from bundling symbiotic products compared to arbitrarily lumping unrelated goods. Shoppers recognize how the thoughtful pairings improve their experience.

Cost-Efficient Items

Another bundle building approach is specifically selecting lower-cost components, such as products with Minimal Marginal Costs (MMCs). These are goods with cheap per-unit economics at production scale.

Companies may produce tote bags very efficiently for example, with high volumes keeping per-bag costs low. Bundling these with higher cost items like clothes can lift average order values without sinking margins. Excess inventory products also represent cheap bundle padding.

Smartly using low cost items - rather than only premium products - can facilitate aggressive bundle pricing that removes consumer purchase friction while sustaining profitability.

Mix and Match Flexibility

Offering some flexibility for customers to select or mix and match products across a range of bundled goods encourages larger order sizes as well.

Shoppers may have specific preferences or only require certain items at a time. Allowing choose-your-own construction from a catalog of products removes limitations and spurs big hauls.

Retailers can delineate parameters around mix and match flexibility too. Like clothing retailers may allow choosing any 3 t-shirts from a collection. Or fast food apps permit swapping fries for a different side. Flexibility pays off in larger basket sizes.

Advanced Bundling Approaches

Membership Bundle Tiers

Rather than one-off bundles, retailers can provide ongoing access to curated products or services through membership tiers. Different subscription levels feature bundles catered to specific user needs.

For example, a grocery delivery service might offer bundles of staple goods in a basic plan, then additional produce and meal kits at higher tiers. Software too like Adobe Creative Cloud bundles more apps as customers upgrade through Premier, Professional, and Enterprise plans.

The benefit is continually delivering specialized bundles that align value to different budget thresholds. Top tiers can subsidize lower priced access for the masses. Membership revenue is also more predictable over arbitrary a la carte sales.

Subscription Box Variants

Related to memberships, subscription box startups have emerged selling themed bundles of goods through surprise collections or personalized boxes. These ship on some recurring basis like monthly or quarterly.

Subscription box bundles are tailored to niche interests like baking, arts and crafts supplies, or health products. Because boxes ship on a schedule, companies can plan volumes and inventory costs ahead of time. It also locks in recurring customer spend.

The automated, hands-off nature of scheduled bundle deliveries leads to immense customer retention as subscribers anchor in habits receiving convenient packages.

Omnichannel Bundles

As retail increasingly integrates online and offline channels, savvy bundles combine digital and physical products to deliver omni-channel value. One example is bundling eBooks or digital soundtracks at discount with related physical media like print books or vinyl records.

During COVID lockdowns, restaurants leveraged omnichannel bundles too by packaging meal kits or grocery items with gift cards to use later in reopened dining rooms.

Omnichannel bundles essentially give consumers the "best of both worlds" in a hybrid digital-tangible shopping experience. This flexibility holds unique appeal compared to pure eComm sites or brick-and-mortar stores individually.

Marketing Bundles Effectively

Standalone Product Desirability

The most effective product bundles feature individually compelling components that consumers actively want to purchase on their own inherent merits. Bundling serves to amplify interest - not compensate for lackluster goods needing discounts to sell.

For example, smartphone makers bundle hot selling device models with extras like subscriptions or accessories. The phones themselves magnetize buyers without bundling first. This avoids positioning bundles as the only way products will sell.

Concentrating on building standalone product desirability and quality ensures sustainable demand. Bundling then becomes an added value layer rather than a necessary concession.

Communicating Total Savings

Savvy retailers market the collective extra savings bundles offer compared to buying items individually. Simply showing the bundled price isn't enough - messaging should emphasize additive percent-offs.

For example, a tech retailer can bundle wireless headphones with a phone case for $100 instead of $140 separately. Messaging would focus on "Save 28%!" versus just stating the kit cost. Doing so spotlights the stacked savings versus individual purchases.

Overcommunicating overall discount percents accelerates the customer value realization process. This further justifies bundle purchase decisions.

Performance Testing Approaches

To optimize bundle configurations and marketing, rigorous experimentation is key. Retailers should methodically test component combinations, pricing thresholds, savings messaging and more.

Approaches like multivariate testing bundle variants against KPIs such as conversion rates and average order value reveal ideal recipes. Testing consumption related bundles on some customers before broader rollout contains risk.

Analytics tracking tied to testing also informs bundle ranking models for personalized recommendations. Continual testing and analytics fuels a self-improving bundling optimization flywheel.