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Estd 4.22.2023
Based on Price to Scale, the answer is that you need to balance value capture with customer needs. Here are some key takeaways from our pricing strategy book:
- Bundling vs. Individual Sales:
- Our book discusses that while bundling is a powerful tool for reducing churn and driving growth, it can limit flexibility. In some cases, letting customers pick individual components might dilute your ability to upsell or cross-sell in the future.
- Good, Better, Best Packaging:
- One recommended approach is to design tiered packages (as seen in our “Good, Better, Best” model). This allows you to capture different segments:
• A minimal or “Good” package covers the key functionality (often the component a customer might be interested in)
• Higher tiers offer advanced features and a fuller integrated experience. - This approach helps avoid the pitfall of customers feeling the bundle is too expensive while still maintaining strategic product groupings.
- Modular Approach:
- Our book also covers modular pricing, where you attribute individual value to distinct features. This method can let customers start with a base bundle and then add features as needed. However, too much flexibility can sometimes result in confusing packaging and a loss of coherence in the value proposition.
- Strategic Considerations:
- If there’s sufficient market demand for standalone components, you might consider offering a more modular or à la carte option—but be cautious. Supporting individual components might reduce the integrated value and marketing strength of your bundled offering.
In summary, our strategy in Price to Scale is to use bundling intelligently. The emphasis is on striking the right balance: ensure that price-sensitive customers have an entry point (through a minimal “Good” package or carefully managed modular add-ons) while maintaining the overall value of the integrated solution. This not only simplifies decision-making for your customers but also preserves the ability to grow revenue with upsells and cross-sells.