Bundling Business Model – How Does It Work?

Introduction

In the modern-day and age, there is a lot of emphasis on business innovation that can ensure that businesses stay afloat on numerous grounds.

As a matter of fact, it is highly important to ensure that businesses today are able to provide their customers with the best value so that they are able to stay sustainable in the increasingly competitive business environment.

This is mirrored by the recent increasing rate at which businesses strive to make changes in their business models, and ensure that they stay relevant and afloat in the already cluttered market.

When it comes to business bundling, it can be seen product bundling, or simply the business bundling model has continued to grow in popularity significantly over the past few years.

This is mainly because of the fact that it tends to provide customers with options that can help them to generate more value for the purchase, as a result of the product bundling offers.

What is Product Bundling Business Model?

Product Bundling Business Model can simply be defined as a business model that involves businesses combining a certain number of products together, and selling them to their customers at a discounted price.

This helps them to increase their revenue, and in the same manner, it also helps customers to make an amalgamated purchase, which also proves to be cost-efficient for the overall cause.

Therefore, in simple terms, a bundling business model mainly focuses on packaging complementary goods into a single offering.

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This model business incentivizes purchases with higher token size so that customers are able to get discounts, and the value is shared between the consumer, as well as the producer of these goods.

Today, product bundling and businesses that rely on bundled solutions has significantly increased because of digitization, and the relative ease at which different products can conveniently be bundled together.

How Does Product Bundling Work?

Product Bundling basically works as a result of collaboration, between two or more different products or brands that can enable users to procure a number of goods and services at a competitive prices.

The main incentive for customers in this regard is to get more value out of the options that they have. From the perspective of a business, product bundling works in different ways.

Firstly, in the case where the business is the manufacturer, they can opt for bundled services by creating a product mix that can facilitate their customers to an utmost extent.

For example, in the case of the printer business, printers and ink cartridges are different products, which complement each other.

However, they are sold separately, as well as in a bundled form. This is because it incentivizes customers to buy a particular product in the cases where they know that they are able two things together, from one particular place.

Therefore, they structure the deals in a manner, in which both products can be sold together, as an attractive package.

On the other hand, it can also be seen that the situation tends to differ for different businesses. For example, bundling might be different for retailers in the sense that they might have to combine a number of different goods and services in order to create a discounted bundle that would attract customers. This might be of related goods or unrelated goods.

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Real-Life Examples of Product Bundling

There are numerous different examples of product bundling that are relevant in the current discussion. They can either be very basic, or very advanced and complex.

However, the common denominator between these different types of product bundling tends to be the fact that they are widely popular, regardless of the business nature, or product type that is being sold.

A very basic example can be a shampoo and a conditioner. Even though when mixed together, it does classify as a single product, yet it can be seen that it does classify as bundling because it provides a 2-in-1 option to customers, which further incentivizes them to make the purchase (since they don’t need to buy it differently otherwise). On the other hand, a relatively complex example in this regard is perhaps of Apple selling accessories with the iPhone at a discounted price.

For example, if the stand-alone price of the iPhone is $600, and the stand-alone price of AirPods is $200, Apple might bundle the two to create a specialized package for their potential customers.

Conclusion

Bundling in businesses tends to be increasingly popular owing to the fact that it helps businesses to create a sustainable, and substantial advantage to upsell their goods and services to their customers.

Regardless of the fact that this might require the business to give higher discounts, yet it plays to be in favor of the customers, as well as the company in terms of higher turnover.

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