Julie’s Blog: Product Pricing and The Power of Bundling

In my internship I have recently taken on more responsibility that is expanding my knowledge of product pricing and the power of bundling. I have learned that if a product is simple, but offers a few options it generates better profits. It is very difficult to put a price on something that isn’t physical.

Product Pricing options

People are always looking for the best deal with the best price. When you think about the best product pricing strategies, there are a few things you should keep in mind. Product pricing is tricky because every customer see’s a product with a different value. The product may be less valuable to one customer that doesn’t use it as much, but for a customer who needs it there is more value in the product. Due to the different values of the product depending on customer, it is important for you to offer different options in pricing as well. Also keep in mind that the price matches your target market. If you offer High-end luxurious products, a price that is too low can actually hurt your image. On the other side, if you are targeting people with a tight budget, a low price that still allows for special deals or regular promotions will be a better option for you. However, if you offer to many options, you run the risk of losing customers all together because they can’t decide. This can be solved by only allowing 3 options of price and bundle packages.

Product Bundling

Bundling products and services together is when you take the original product and add more value to it,  like adding a service with the product. If your product is a book then you can sell the book alone as one option, for a second option you have the book, a signed poster and a DVD. Obviously, the book, poster and DVD  price would be higher then the book alone. For clients that want it all, you can then bundle the DVD, an audio version, and a singed poster. For the third option you may even want to included gift wrapping with purchase.

Product Bundling lets the buyer chose what price point is best for them, gives them a comparison price while adding more value to your original product. If you buy a product and there is a similar product with more value for a few more dollars most people tend to chose the option where they get more value for their money.

When deciding how to price and package your product, it is important to keep these rules in mind. Limit bundle and package options to three. This give customers a price to compare, but it keeps them focused and away from confusion. It also helps you to achieve more profit, whether you have customers who are all in on the product, or if you have customers who are unsure but still want to test the product. Make sure to bundle by adding more value to each package. And finally don’t have to many options for your customers to chose from or they will be confused, which will stop them from buying the product all together.

Product pricing and creating different product and service bundles are a great way to make your product more appealing to a wider audience. It’s definitely worth it to develop a product pricing strategy and test it over time to ensure that you are providing the best deals for you customers.

via:http://jupiter-labs.com/julies-blog-product-pricing-power-bundling/