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Estd 4.22.2023
Below is our answer based on guidance from our pricing strategy book, Price to Scale:
• Direct Answer
When handling different usage levels within a bundle, it’s essential to design your pricing and packaging to account for variability in how customers use each product. Some customers may end up using one component heavily while only grazing on others, which can lead to dissatisfaction if they feel they’re overpaying for unused or lightly used features.
• Book Recommendations and Frameworks
Our book discusses several approaches for such scenarios:
○ Modular or Segmented Packaging:
– Instead of one rigid bundle, consider developing Good-Better-Best or modular pricing structures. This allows you to create tiers where each package is targeted toward different use cases and customer segments. That way, customers who only need one product can choose a lower-tier package aligned to their needs.
○ Meter-Based or Usage-Based Pricing:
– A shift toward meter-based pricing—similar to what AWS or Azure offer—can help align charges more closely with actual usage. This means customers pay for what they use and aren’t forced into a full-suite deal if their needs are limited.
○ Proactive Customer Segmentation and Creative Alternatives:
– As highlighted in Price to Scale, it’s advisable to segment your customer base and offer alternatives. For example, if a customer is using lightweight features, you might offer more favorable rates or upgrades customized to their usage profile. Options might include higher discounts for loyal customers, different list prices for new packages, or explicit no-downgrade policies to avoid price discrepancies.
• Practical Application
In practice, if you notice customers feeling uneasy about paying for an underused product in a bundle, you can:
– Evaluate and potentially simplify your bundles to reduce complexity and enhance clarity.
– Introduce add-ons or standalone options for heavily used products so customers aren’t locked into paying for an entire suite.
– Communicate transparently about how value is determined across the bundle, ensuring customers understand the comprehensive benefits versus the cost of acquiring individual features.
• Summary
In summary, ensuring your product bundles are flexible—whether through modular design, usage-based pricing, or customer segmentation—helps align pricing with actual product use. This way, customers feel they are paying for value tailored to their needs, reducing dissatisfaction when they only heavily use one product within the suite.
Remember, as outlined in Price to Scale, a proactive and creative approach to bundling can help you address customer concerns and maintain a balanced pricing strategy that serves diverse usage levels.