Bundling information goods is a popular strategy in the digital age, and for good reason. By bundling goods together, sellers can capture larger areas of the demand curve and pass surplus back to the consumer. This type of strategy works especially well when selling taste-based products, like software, as opposed to commoditized goods. Let’s dive into how this strategy works, and when you should use it.
How Does Bundling Create a Flatter Demand Curve?
Bundling information goods is an effective strategy for flattening the demand curve. When goods are bundled together—that is, when multiple items are sold as one unit—consumers get more value for their money because they receive a bundle of products at a discount. This allows sellers to capture larger areas on the demand curve by taking advantage of economies of scale while passing extra value back to consumers.
It’s important to note that bundling isn’t the only way to flatten the demand curve; versioning and bulk discounts can also be used. However, these options don’t offer quite as much flexibility as bundling does; with versioning, sellers must choose between offering certain features or not offering them at all; with bulk discounts, sellers must offer discounts on all products in order for customers to take advantage of them—with bundles, you can mix and match any combination of goods you’d like.
When Does Bundling Work Best?
When it comes to creating successful bundles, there are two types of products you should keep in mind: taste-based products and commoditized goods. Taste-based products are ones that require some level of customization; think software or online services here. These types of products work best with bundles because customers have more freedom in choosing which items they would like included in their package deal. On the other hand, commoditized goods—products that don’t require much customization—are better suited for versioning or bulk discounts because customers don’t need as much freedom in picking out individual items from a bundle deal.
To get an idea of how this works in the real world, consider Spotify Premium’s Family Plan bundle; this bundle offers six separate accounts under one roof at a discounted rate compared to buying each account separately. The company has been able to capitalize on its users’ needs by offering them multiple accounts at once—a perfect example of why taste-based products work so well with bundles!
In conclusion, bundling information goods can be an effective strategy for flattening your business’s demand curve while still passing savings back to your customers. Taste-based products are especially well suited for bundles thanks to their customizable nature; alternatively, commoditized goods tend perform better with versioning or bulk discounting strategies instead. To learn more about creating successful bundles for your business, be sure to consult experts who specialize in digital marketing and product development!