You see quantity discounts all around you. For example, buy one, get a second one 50% off. But what if you sell items like clothes washing machines? People either buy one or none at all. A quantity discount isn’t going to spur buyers to purchase a second washing machine.
Suppose, however, you were to offer a price discount on the purchase of a second, different item? You can use a pricing technique called mixed bundling to increase your sales of products or services where people either buy one or none at all.
A bundle is two or more separate products sold together as a package. A mixed bundle is a bundle where buyers can purchase any of the items separately or together as a package.
With mixed bundling, the bundle price is almost always less than the total of the separate purchase prices. That’s the incentive for buyers to upgrade their purchase from just one product to the bundle.
For example, imagine an appliance retailer that sells clothes washing machines and clothes dryers. A mixed bundle would give buyers the option to purchase just a washer (W), just a dryer (D) or both of them together (W+D).
Suppose also that Price (W) = $800, Price (D) = $700, and Price (W+D) = $1,400. Thus, Price (W+D) is less than Price (D) + Price (W).
What this means is that the person who buys a washing machine can add a dryer for just $600 more. In essence, they will pay $100 less for their dryer ($1400 – $800 = $600) than the person who leaves the store with just a dryer ($700).
The beauty of the bundle discount is it applies to any item in the bundle. You don’t need to specify which product in the bundle is being discounted.
The person who adds a washing machine to their purchase of a dryer pays $100 less for their washer ($1400 – $700 = $700) than the person who purchases just the washing machine ($800).
You can see how mixed bundling can be a powerful selling technique. “Hey, how would you like to add a clothes dryer to your purchase? You’ll save a $100 if you buy it today with your washing machine.”
Remember, mixed bundling is one way to give a price discount to buyers who are willing to purchase more from you in situations where they don’t want more of the same product.
Caveat: Whether a particular product is a “one or none” item depends on the context. For the typical homeowner, a clothes washer is almost certainly a “one or none” decision. But for the owners of a laundromat the purchase decision could be “none, one, or more.”
Read more in Two actions that will make mixed-bundling more profitable.