Bundling Pricing Model

Abstract

Bundling pricing is a strategy employed by businesses to offer several products as a package and sold as a single unit for one price. In today’s competitive environment, the bundling pricing has gained traction in all types of businesses. It has become an effective method in boosting profits while enhancing overall customer experience, especially during economic downturn where customers are more skeptical about price. However, it is crucial to create bundles with products that consumers genuinely need and set reasonable prices. Price bundling becomes an effective task if a business is armed with real-time pricing knowledge. This study proposes a framework to determine the bundling pricing by taking into consideration the most relevant aspects such as consumers’ preferences, production costs, company characteristics and also the market competitiveness. It is built on the idea of consumer surplus which indicates the difference between what the customer pays and what the customer was willing to pay and crafted the bundling price in an ever-evolving process that takes plenty of real-world factors into account. This innovative model can be adopted by all businesses especially the small and medium enterprise in effectively tailoring their bundling pricing strategy.