Let’s imagine this as a shopper: You’re walking through a bustling market, and you come across a stall with a sign that catches your eye: “Buy a set of three candles for 20% off!”. You’re drawn to it—because, well, who doesn’t love a good deal? You were originally planning to buy just one, but the idea of getting three for a discount feels like a win. You pick them up, pleased with your purchase, and keep walking with a little extra spring in your step.

What you didn’t realize is that this small business is now benefiting from a significant boost in profits. And here's the kicker: the business didn’t even have to acquire new shoppers to make that happen.

This piece will take you through the following key topics:

• How Bundles make Profit Margins

• How Product Bundles Help Merchants Boost Profit Margins

• How Product Bundles Benefit Shoppers

• Strategies to Lower Costs

• Creative Tips to Increase Profit Margins with Product Bundles

• Conclusion

❇️ How Bundles make Profit Margins

By strategically grouping products together, businesses can increase the average order value (AOV), reduce costs, and maximize the perceived value of their offerings. But let’s go beyond theory and look at some real numbers to understand exactly how bundling drives profitability.

Let’s assume price per candle is $10.

You introduce a bundle of 3 candles at a 20% discount, priced at $24 instead of $30.

Now, since shoppers perceive more value, let’s assume that instead of buying just one candle, 60% of them (60 customers) opt for the bundle instead.

Bundle Sales (60 shoppers buying the bundle):

• Price per bundle: $24

• COGS per bundle: $12 (since 3 candles × $4 each = $12)

• Profit per bundle: $24 - $12 = $12

• Profit margin: ($12 ÷ $24) × 100 = 50%

Total revenue from 60 bundle buyers:

• 60 bundles × $24 = $1,440

• Total COGS for 60 bundles: 60 × $12 = $720

• Total profit from bundle buyers: $1,440 - $720 = $720

Now, the remaining 40 customers still buy a single candle at full price.

Single Candle Sales (40 customers buying one candle each):

• Total revenue: 40 × $10 = $400

• Total COGS: 40 × $4 = $160

• Total profit from single candles: $400 - $160 = $240

Comparing the Total Profits

Key Takeaways

1. Higher Total Profit with Bundles:

   • Selling only individual candles: $600 total profit

   • Selling bundles + single candles: $960 total profit

   • An extra $360 in profit!

2. Higher Overall Revenue:

   • Selling only individual candles: $1,000 revenue

   • Selling bundles + single candles: $1,840 revenue

   • An increase of $840 in revenue!

3. Bundles Encourage Higher Spending Per Customer:

   • Without bundles, shoppers buy 1 candle = $10 per shopper

   • With bundles, shoppers buy 3 candles = $24 per shopper (more than double!)

4. Increased Sales Volume Helps Reduce Other Costs:

   • Lower shipping, packaging, and marketing costs per item when selling bundles.

   • Fewer individual transactions = fewer operational expenses.

Even though the per-unit margin is slightly lower (50% instead of 60%), the total sales volume and revenue increase so significantly that the business makes much more profit overall.

By leveraging product bundling, businesses increase average order value, encourage higher spending, and maximize overall profit, making it a smart strategy for boosting profit margins!

❇️ How Product Bundles Help Merchants Boost Profit Margins – Real-Time Scenarios

Bundles can address key challenges by tackling the following major issues:

Let’s break it down with real-world merchant challenges and how bundling provides a profitable solution.

Scenario 1: Slow-Moving Inventory

Merchant’s Problem: A clothing retailer notices that summer T-shirts are selling well, but lightweight scarves are piling up in storage.

Bundle Solution: Instead of discounting scarves heavily, they create a “Breezy Summer Combo”—a T-shirt + scarf bundle at a slight discount.

• Increases Perceived Value – Shoppers see the scarf as a stylish add-on.

• Moves Inventory Faster – The slow-moving scarves get sold alongside fast-selling items.

• Boosts Average Order Value (AOV) – Instead of just a T-shirt purchase ($20), the shopper buys the bundle ($30).

💰 Profit Impact: Even with a 10% discount, the retailer sells more and prevents losses from dead stock.

Scenario 2: High Shipping Costs

Merchant’s Problem: An online beauty brand struggles with high shipping costs because shoppers often buy only one small product, like a face serum.

• Bundle Solution: The brand offers a “Glow Essentials Kit”—serum + moisturizer + face mask.

• Increases Order Value – Instead of $20 for one product, shoppers spend $50 for the set.

• Reduces Shipping Costs – Instead of three separate shipments over time, one bundle ships in a single package.

• Encourages Shopper Loyalty – Shoppers try more products, increasing repeat purchases.

💰 Profit Impact: Lower shipping costs per unit + increased order value = higher margins per sale.

Scenario 3: Competitive Pricing Pressure

Merchant’s Problem: A local coffee shop competes with big chains offering aggressive discounts on coffee.

Bundle Solution: Instead of lowering coffee prices, they introduce a “Morning Power Pack”—a coffee + breakfast pastry at a slight discount.

• Adds Value Without a Price War – Instead of slashing coffee prices, they create an attractive offer.

• Drives More Sales – Shoppers spend more than just a cup of coffee.

• Encourages Habitual Buying – The bundle becomes a go-to morning routine for shoppers.

💰 Profit Impact: Higher spend per shopper and better margins compared to just coffee sales.

Scenario 4: Shoppers Hesitate to Try New Products

Merchant’s Problem: A pet store launches a new organic dog food, but shoppers hesitate to switch from their regular brand.

Bundle Solution: They offer a “Healthy Pup Starter Kit”—new organic dog food + a free treat + a chew toy.

• Reduces Risk for Shoppers – A freebie makes them more willing to try the new product.

• Drives Cross-Sales – The chew toy increases the total spend.

• Encourages Repeat Purchases – If dogs love the food, shoppers will keep coming back.

You can explore more details on how to attract repeat shoppers here!

💰 Profit Impact: Instead of low initial sales, the bundle accelerates product adoption and builds long-term sales.

❇️ How Product Bundles Benefit Shoppers – Real-Time Scenarios

Product bundling isn’t just great for merchants—it also creates a win-win for shoppers.

Bundles offer convenience, better value, and cost savings while ensuring shoppers get everything they need in one go. Let’s explore some real-world shopper challenges and how bundling provides the perfect solution.

Scenario 1: “I Want to Save Money”

Shopper’s Problem: Emma wants to buy skincare products, but purchasing a cleanser, moisturizer, and sunscreen separately is expensive.

Bundle Solution: A beauty brand offers a “Glow Kit”—all three essentials at a discounted price.

• Saves Money – The bundle costs $50 instead of $60 if bought separately.

• Ensures Compatibility – The products work well together, removing the guesswork.

• Convenience – One purchase gets her a complete skincare routine.

💰 Shopper Benefit: Emma spends less per item and gets better value for her money.

Scenario 2: “I Hate Paying for Shipping”

Shopper’s Problem: Jack needs a phone charger but doesn’t want to pay $5 for shipping on a $15 order.

Bundle Solution: The store offers a “Tech Essentials Pack”—charger + cable + earbuds, with free shipping on orders over $30.

• Avoids Shipping Fees – By bundling, Jack qualifies for free shipping.

• Gets More Value – Instead of just a charger, he gets extra accessories.

• One-Time Purchase – No need to place multiple orders later.

💰 Shopper Benefit: Jack saves on shipping and gets useful extras.

Scenario 3: “I Need a Complete Solution”

Shopper’s Problem: Sarah wants to start working out at home but doesn’t know what equipment to buy.

Bundle Solution: A fitness store offers a “Home Gym Starter Pack”—dumbbells, a yoga mat, and resistance bands.

• Eliminates Confusion – Everything she needs in one package.

• More Affordable Than Buying Separately – Saves 15% compared to buying items individually.

• Encourages Action – She’s more likely to start her fitness journey with all essentials at hand.

💰 Shopper Benefit: Sarah gets a complete, budget-friendly solution without overthinking.

Scenario 4: “I Need a Gift, But I’m Not Sure What to Buy”

Shopper’s Problem: Mike wants to buy a baby shower gift but isn’t sure what new parents need.

Bundle Solution: A baby store offers a “Newborn Essentials Bundle”—baby clothes, blankets, and a soft toy.

• Easy Decision-Making – The store curates a useful gift set.

• Saves Time – No need to browse and pick individual items.

• Looks More Thoughtful – The bundle feels more complete than a single item.

For more on gift sets, check out the complete guide to gift bundles here!

💰 Shopper Benefit: Mike gets a great gift without the stress of choosing individual products.

Bundles save shoppers money, offer convenience, enhance the shopping experience with curated sets, and simplify decision-making by providing everything they need in one purchase.

❇️ Creative Tips to Increase Profit Margins with Product Bundles

Unlock higher profit margins by strategically bundling products to enhance value, appeal, and shopper satisfaction.

1. Use Tiered Bundles

• Idea: Offer bundles in tiers (e.g., basic, deluxe, premium) with increasing value at different price points.

• Benefit: Attract different types of shoppers by giving them options to choose bundles that fit their budget while upselling the higher-value tiers.

• Tip: In each tier, make sure the additional items in the higher bundles provide a clear upgrade (better quality, extra features, more convenience).

2. Discount on Bundle Price

• Idea: Offer a small discount when shoppers purchase bundles as opposed to individual items.

• Benefit: Encourages shoppers to buy more at once, increasing the average order value.

• Tip: The discount should be attractive enough but still allow for margin growth. For example, bundle a $40 item with another $40 item and sell the two for $70 instead of $80.

3. Bundle with Add-Ons

• Idea: Bundle your main products with add-ons that are low cost but add perceived value (e.g., a $2 keychain with a $50 backpack).

• Benefit: The perceived value of the bundle is much higher than the actual cost, encouraging the shopper to feel they’re getting a deal while you keep costs low.

• Tip: Choose add-ons that complement the main product but don't add significant overhead to your costs.

4. Offer Custom Bundles

• Idea: Allow shoppers to choose their own bundle from a list of products, offering them flexibility.

• Benefit: Custom bundles allow shoppers to personalize their experience, often leading to higher satisfaction and loyalty.

• Tip: Make sure the customization process is simple and intuitive for shoppers to create their bundles.

5. Leverage Limited Quantities for Scarcity

• Idea: Create bundles with limited quantities (e.g., "only 100 bundles left!") to enhance urgency.

• Benefit: Drives immediate sales by tapping into the fear of missing out (FOMO), often increasing demand.

• Tip: Track inventory and make sure the "limited quantity" is real to maintain trust with shoppers.

6. Discount on Bundle Price

• Idea: Offer a small discount when shoppers purchase bundles as opposed to individual items.

• Benefit: Encourages shoppers to buy more at once, increasing the average order value.

• Tip: The discount should be attractive enough but still allow for margin growth. For example, bundle a $40 item with another $40 item and sell the two for $70 instead of $80.

❇️ Strategies to Lower Costs

To lower the costs per sale and increase bundle profit margins, you can focus on a few key areas: reducing cost of goods sold (COGS), optimizing shipping, and increasing bundle value.

• Bulk Purchasing: Negotiating with suppliers for bulk discounts will lower the cost of individual products.

• Optimize Packaging: Design a bundled package that minimizes material and labor costs while maximizing the perceived value of the bundle.

• Reduce Shipping Costs: Consolidate shipments, especially for larger bundles, or work with your shipping partners to negotiate better rates.

• Streamline Operations: Cut unnecessary overhead by improving inventory management, automating tasks, or reducing waste in production.

❇️ Conclusion

In conclusion, product bundling is a powerful strategy to boost your profit margins. By offering value-packed bundles, you not only encourage shoppers to spend more but also reduce operational costs. With the right pricing, creative offers, and cost-cutting strategies, bundling can help you grow revenue while delivering great value to your shoppers.

Start optimizing your sales and watch your business thrive—Install FoxSell Bundles Plus on Shopify now!