Welcome to the second instalment of our Ways to develop your Pricing Strategy series. We are moving on to consider ways to utilise and benefit from CPQ strategies Bundle Pricing and Volume Pricing – having looked at Up-Selling and Cross-selling in our last article.
Bundle Pricing
If your products are regularly sold together, you could consider creating Product Bundles.
Bundle Pricing packages together multiple products or services, and the overall price to the customer is reduced compared to them buying each product individually.
This strategy means a greater initial ROI from acquiring the customer, as they place a larger order in their initial purchase.
The customer generally understands the cost savings they receive from the product bundle. And also benefits by solving multiple requirements in one purchase.
Customers love a bargain – Bundle pricing delivers while also increasing your sales value
As customers, we all want to know we’re getting a bargain or a great deal.
As a business, Bundle Pricing can be a straight-forward way to offer added value to your customer, while also supporting your sales team to increase the size of the overall quote then order.
• Where a straight 10% discount CPQ strategy may still see the customer only buying a single product
• A bundle may represent a similar level of discount. But you are selling multiple products, so your sales revenue and the overall margin are increased.
There are many examples of Bundle Pricing everywhere we go – Meal Deals at Supermarkets, New Car packages etc.
All-inclusive holidays or ‘package’ holidays also follow this principle, they bundle Flights, Hotel, Transfers, Sustenance and maybe even entertainment together. This way the customer gets the best value deal for the particular combination of products.
By doing this the holiday provider also ensures the customer uses all their available services and doesn’t, for example, opt to eat away from the hotel or get a cab from the airport.
Paying one company one price also simplifies things for the customer, thus offering them another benefit.
Bundle Pricing CPQ strategies secure the maximum appropriate spend from each client – by increasing the number of products or services they take-up in one order.
Volume Pricing
Volume pricing allows you the leverage the cost savings you may experience from economies of scale when producing your product or providing your service.
You offer a discount based on the number of units sold.
But Why?
Generally, the more units sold the lower your cost-per-sale – as you only have to process one order, find one customer, make one delivery etc. So you can pass some of these savings onto the customer – to increase both sales and loyalty.
By offering a lower cost per unit to the customer, you maximise on their current willingness to pay for your particular product or service.
Volume Pricing to encourage Loyalty and remain Competitive
If a coffee shop came to you wanting to buy your particular Coffee Beans, they have already made a decision to buy your product, from you.
• Volume pricing allows you to maximise the order value while offering the customer better value.
• It also reduces the risk of them buying elsewhere soon, as they have committed to a larger order with you.
Both these factors help secure more customer loyalty from each order.
Competitor analysis is an important aspect to consider when developing any element of your CPQ or pricing strategy, including Volume Pricing.
• Your volume price may enable you to compete with competitor base prices – where they are offering a lower base price point.
• Or if your rivals also use volume pricing it can ensure you remain competitive.
Price and Value are likely to be key differentiators between you and the competition.
So adding value for your customers with Bundle Pricing, Volume pricing, or any of the other strategies we are considering in this series, can be key to your success.
Join the conversation
- Do you think Volume pricing is appropriate for your products?
- Have you seen bundle pricing be effective for your business – or work on you as a consumer?
- Any other thoughts or questions – please comment below
