Bundled pricing strategy (Essay Sample)

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Bundled pricing strategy
Bundled pricing strategy refers to putting different products or services in one package and selling them at a price that is lower than the summation of the selling prices of the individual services or products. A good example of bundled products is a package of chips, burger, sausages, tomato-ketch-up and some chicken, which most fast-food restaurants sell as one package. The price for the one package tends to be lower than the summation of the different product's prices if compared (Smith 209).
Companies use bundled pricing strategy for numerous reasons that bring advantages that outweigh its disadvantages. Firstly, companies make bigger profits when they sell their products and services using bundled pricing strategy than selling them a la carte (as individual products or services). The causal factor in such a scenario is the attraction that a bundled package evokes to the customers. A customer will be attracted to buy a package at a fair price than buying single products or services that will result to a larger expenditure. This means that many customers will be more attracted to buy a package of products or services from a company than when the products or services are sold singly. For instance, a person wishing to spend $30 dollars on a meal comprising of chips, burgers, soda and chicken will be more attracted to a company that offers the package at that price than one which sells the individual products at a higher price. This is the explanation that sees companies using the bundled pricing strategy winning more customers than the companies that sell single products. The overall revenue for the former is always substantially higher than the latter. It is also important to understand that bundled pricing strategy gives a greater satisfaction to customers than single-product sales (Smith 219).
However, companies do not base their decision to use bundled pricing strategy on customer satisfaction alone. Companies always assess the level of competition on the market so that they can come up with ways to curb it and get a fair share of profits from the sale of their products and services. In this case, companies opt to use bundled pricing strategy to make sure that they trap loyal customers as well as other people into buying their products. These companies manage to reach a larger customer base since the culture of customers is predominantly buying goods and services at a fair price (Smith 235).
Nevertheless, a company can use this strateg...