As an e-commerce merchant, you're constantly looking for ways to increase Average Order Value (AOV) while also providing genuine value to your shoppers.

Bundling products is not just about grouping items together—it’s about pricing them in a way that maximizes both perceived value and your bottom line.

Perceived Value - Perceived value is how much a customer thinks a product or service is worth, based on what it looks like, how it's presented, and how it meets their needs—not just its actual price.

Bottom Line - The bottom line is the amount of money a business makes after all expenses are paid—it’s the final profit or loss.

🎯 Setting Clear Goals for Your Pricing Strategy

It’s obvious that bundles serve a larger business goal. But, you need to clearly define what your goals are so that you can price your bundles right.

1. Maximize Revenue

Your bundle pricing should encourage shoppers to spend more than they would on individual item purchases.

2. Move Inventory

If you have slow-moving stock, bundling these items with bestsellers can help clear inventory while maintaining profitability.

3. Encourage Repeat Purchases

Use bundles to introduce shoppers to new or complementary products, increasing the likelihood of repeat purchases and increasing loyalty.

4. Optimize Profit Margins

Striking the right balance between discounts and profit margins ensures that your bundles are attractive to shoppers while still benefiting your bottom line.

By keeping these goals in mind, you can craft a pricing strategy that aligns with your business needs and shoppers expectations.

☑️ Pricing Models for Bundles- Choosing the Right Approach

Choosing the right pricing model for bundles is crucial to maximize your brand’s profitability and customer satisfaction too.

1. Optional Bundling:

• Definition: Products are offered both individually and as part of a bundle, with the bundle priced at a discount.

• Pros:

  • Provides flexibility, appealing to a wider range of shoppers.

  • Allows for upselling individual items while still promoting the bundle.

• Cons:

  • Shoppers may opt for the individual items if the discount isn’t compelling enough.

  • It can complicate pricing strategies and inventory management.

• When to Use: Ideal for businesses with a mix of high-demand and low-demand products. For example, offering a discount on a bundle that includes both popular and niche products.

2. Discount Bundling:

• Definition: Shoppers receive a discount when purchasing a bundle compared to buying the individual products separately.

• Pros:

  • Simple to understand and attractive to price-sensitive shoppers.

  • Encourages shoppers to buy more products.

• Cons:

  • The discount could reduce margins significantly, especially if the products aren’t priced carefully.

  • Risk of undervaluing the products.

• When to Use: Best for clearing out inventory or incentivizing shoppers to try additional products at a discount.

3. Psychology Based Pricing:

• Definition: The bundle price is designed to evoke a psychological reaction.

For example, pricing a bundle at $99.99 instead of $100 creates the perception of a better deal because customers tend to focus on the left-most digits (e.g., "99" instead of "100"), even though the difference is minimal. This subtle tactic often leads to higher purchase rates.

• Pros:

  • Leverage consumer psychology, making the price feel significantly lower than it actually is.

  • Can be very effective for low-cost bundles or when you want to encourage impulse buying.

• Cons:

  • This tactic can sometimes feel unfair if not used carefully.

  • May not work well for high-end or premium products.

• When to Use: Ideal for lower-priced products that rely on volume sales.

4. Tiered Bundling:

• Definition: Different levels of bundles are offered at different price points (e.g., basic, premium, deluxe).

• Pros:

  • Appeals to a wider range of customers, from budget-conscious to those seeking luxury.

  • Creates a sense of value by giving customers multiple options.

• Cons:

  • Can be confusing if the differences between tiers aren’t clearly communicated.

  • Higher-priced tiers may not always sell as well, even if they offer more perceived value.

• When to Use: Great for offering a flexible variety of options to different customer segments.

💸 How to Price your Bundles

1. Calculate the Total Individual Value

Start by determining the total cost of all the items in the bundle if purchased separately. This will serve as the “anchor” price that customers compare the bundle price against.

• Example: A skincare bundle with a cleanser ($20), toner ($25), and moisturizer ($30) has a total individual value of $75.

Anchor Price - An anchor price is the original price shown for a product before a discount.

2. Decide on the Discount

Offering a discount is key to making the bundle appealing. The discount doesn’t have to be massive; even a small percentage can make a big psychological impact.

• Standard discounts for bundles typically range between 10% and 30%.

• Example: If you offer a 20% discount on the $75 skincare bundle, the bundle price would be $60.

3. Factor in Your Margins

While discounts drive sales, it’s crucial to ensure that your profit margins remain healthy. Calculate the Cost of Goods Sold (COGS) for the bundle and ensure the discounted price leaves enough room for profit.

• Example: If your COGS for the skincare products is $35, selling the bundle at $60 still leaves a $25 profit.

4. Use Tiered Pricing for Flexibility

Offer tiered pricing for bundles to encourage customers to spend more. For example:

• Buy 2 items: Save 10%

• Buy 3 items: Save 15%

• Buy 4 or more: Save 20%

5. Highlight the Savings

Customers need to understand the value immediately. Clearly display the original total price and the discounted bundle price.

• Example: "Total Value: $75, Bundle Price: $60 (You Save $15!)"

• This taps into the anchoring effect, making the bundle price more appealing.

6. Test and Optimize

When pricing bundles, you can’t just set it and forget it. Test different bundle prices, for instance over time, you can try different pricing for the same bundle to compare and see which ones perform best.

You can use Shopify’s A/B testing apps like Intelligems, ABConvert, and Trident AB to analyze data and find what works best for your shoppers.

📈 How to Analyze Bundle Performance

How do you know your bundling strategies are effective and profitable? Your performance data can help!

1. Use Analytics Tools

Some tools you can use include:

• E-commerce Platforms:

  • Platforms like Shopify provide detailed sales and bundle performance reports.

• Google Analytics:

  • Track specific events like bundle purchases and compare conversion rates for bundle pages versus individual product pages.

• CRM Software:

  • Tools like Salesforce or HubSpot help analyze how bundles contribute to customer acquisition and retention.

2. Conduct Cohort Analysis

Cohort analysis lets you evaluate bundle effectiveness over time by grouping shoppers who share something in common, like when they bought a bundle, and tracking how they use it over time to see if it works well for them. For example:

• Group shoppers who purchased a bundle and track their long-term behaviours, such as repeat purchases or upsells.

• Compare the Lifetime Value (LTV) of bundle buyers to individual product buyers. This shows how much revenue each group generates over their entire relationship with your business.

3. Compare Revenue Per Bundle

For each bundle, calculate:

This helps identify which bundles are the most profitable and contribute the most to overall revenue. Also lets you identify which type of bundle performs best or which products are most popular in a bundle so that you can set up new bundles and tweak your existing strategy accordingly.

4. Use A/B Testing

Experiment with variations of your bundles to see what performs better:

• Test different price points for bundles.

• Experiment with including or excluding specific items in the bundle.

• Compare performance between fixed bundles and customizable bundles.

5. Tools and Techniques to Simplify Analysis

• Excel/Google Sheets: For simple data analysis, such as comparing sales, revenue, and profit across bundles.

• Predictive Analytics: Use machine learning tools (e.g., Python libraries, AI platforms) to predict future bundle performance based on past data.

• Custom Dashboards: Create dashboards in tools like Power BI or Tableau for real-time insights on bundle metrics.

Make sure to balance offering great deals with keeping your profits healthy. Highlight the savings clearly, show how convenient and valuable the bundle is, and regularly review customer behaviour to improve your pricing. Well-priced bundles not only boost sales but also help build loyal, repeat customers.

If you’re looking for an app to simplify your product bundles, try FoxSell Bundles. Brands like Jerome Alexander, Dialect, Elorea and many more have used FoxSell to increase the success outcome. Install FoxSell Bundles to set up high-converting bundles.