Can Bundling Save Money for Small Business Customers?

Can Bundling Save Money for Small Business Customers
Bundling products and services is a time honored technique used by businesses of all types. Walk into a McDonald’s and you will see bundling in the form of Value Meal where you can buy burger, fries and drink for the price that is lower than if they were bought separately. When you book your vacation package that includes airfare, hotel and car rental for one low price you are buying a bundle. In customers’ mind bundling saves them money by paying less than what they would have to pay otherwise. Businesses also benefit from bundling because they are able to sell more even if they sell at a discount. It appears that bundling is a win-win for both customers and businesses.

Academic research shows that bundling is, in general, beneficial for businesses and not so for customers. This is because bundling allows businesses to price their product in an opaque manner. Consider what happens when a hotel bundles the price of a water bottle with a room charge. If the room costs $200 per night they would simply raise it to $210 and include water bottle in that price. As long as customer does not know that he is paying $10 more for water bottle he will not mind paying $210 for the bundle. However, as soon as he finds out about extra $10 for the bottle of water he may not feel the same way. Clearly, business benefits in this case by bundling items together.

Are there any cases when customers can save money with bundling? It depends on the individual situation. Take a case of bundles offered by telecom companies and cable operators. Phone and cable companies are encroaching in each other’s territory and offering phone, internet and television service together as a bundle. In general, customers stand to save 20-25% by buying them as a bundle. They can save even more if they use the discounts, such as those offered by sky discount codes. If you are looking to buy all three services anyway bundling clearly saves you money by buying them together from the same vendor.

One caveat you have to watch out for when buying services together is the quality of service provided in the bundle. If the phone service provided by the cable operator is not as good as the one provided by a phone company or vice versa you may suffer quality while trying to save money. Majority of these companies publish their service levels along with price, so by ensuring that the service level offered by a phone or a cable company meets your needs you should be able to get what you want at a lower price. Just make sure you only buy what you need, and use what you buy.

What do you think? What other examples of bundles can save you money? Any negative experiences with bundling?