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Estd 4.22.2023
Below is a concise overview of how our book, Price to Scale, suggests approaching the determination of the right discount for product bundles versus individual product pricing:
Direct Value Assessment
• Evaluate the intrinsic benefits and values of each individual product.
• Conduct a structured benefits analysis (for example, using exercises where customers allocate a fixed budget, such as distributing $100 among product features) to capture how customers perceive the added value when products are bundled.Good-Better-Best and Modular Approaches
• In the Good-Better-Best packaging method, products are grouped into tiered packages targeting different segments. This setup simplifies bundling by defining which feature sets are standard versus premium—helping you understand how much discount can be built into each tier.
• The modular approach, on the other hand, involves separately attributing value to components. By evaluating individual products’ contributions within a bundle, you can determine a discount that reflects the streamlined value customers receive when buying multiple products together.Customer Segmentation and Discount Elasticity
• As discussed in our pricing strategy book Price to Scale, different customer segments (such as commercial, mid-sized, and enterprise) each have varying levels of price sensitivity and preferred discount ranges.
• By mapping bundle offers to these ranges (e.g., commercial deals might see discounts in the 10-30% range, while enterprise deals could accommodate much steeper discounts), you ensure that the bundle discount is aligned with market realities and customer expectations.Practical Application
• Start by assessing the standalone value of each product.
• Use customer benefit distribution exercises (as mentioned around pages 77 and 115 of Price to Scale) to understand perceived bundle value.
• Adjust individual product pricing and apply a discount on the bundle that makes it compelling versus purchasing items separately—while ensuring that the overall discount structure remains within acceptable ranges for your target segments.
In summary, determining the right discount for bundles versus individual products involves a combination of structured benefit analysis, tiered pricing strategies (like Good-Better-Best or modular pricing), and customer segmentation considerations. This ensures that each bundle is optimally priced both as a standalone offer and in comparison to the sum of its parts.