How can you apply calculations in business?

PricingPrice differentiation and price bundling

Another pricing tool is price bundling. For this purpose, several products or services of the provider are put together into a package, which is then offered for one price, package price or total price; in technical jargon: bundling. Examples are: the shirt with a tie or the vacation trip with a trip, hotel and meals. With such product and price bundles, the different willingness to pay of customers should in turn be exploited. In addition, the purchase decision can be influenced:

  • The customer's perception of prices is changing. The customer sees: more performance at barely more price.
  • Individual prices can be disguised which are perceived by the customer as too expensive.
  • Price increases can be masked.

A company that offers several products can coordinate the offer and the individual prices. Because the customers connect the product offerings and the prices with each other when it comes to the purchase decision. This creates prices for product lines or product families. Examples are printers and their cartridges, train travel and hotel accommodation, mobile phones and tariffs, and many others. In the customer's perception, products that appear under a common brand umbrella can also belong together; for example cosmetic products such as shampoo and conditioner.

Figure 11 shows the mechanism of price bundling. Two customers from two different customer segments A and B are offered two products by your company. Product 1 costs 200 euros, product 2 costs 300 euros. Customer A pays a maximum of 100 euros for product 1 and a maximum of 400 euros for product 2. So he only buys product 2. The same applies to customer B, who only buys product 1. With your company, you have a total turnover of 500 euros with both customers.

If you now put both products into one package and charge 500 euros for it, both customers will buy the product because the bundle price is exactly the same as the respective sum of the maximum accepted prices. Your company now has a total turnover of 1000 euros.