Bundling & Unbundling

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Perhaps you’ve heard the terms bundling and unbundling mentioned in business, but you’re not exactly sure what they mean—or how they could affect your business.  Hopefully this article will clear up a few key concepts about bundling and unbundling, showing how you can use these concepts in your business, whether you’re an established business or a start-up.

What’s Bundling and Unbundling?

Simply put, bundling means combining multiple small offers into one large offer, re purposing the pre-existing value that you already created to create even more value.  By combining more offers and functions into a bundle, the perceived value of the bundle will tend to increase.

Conversely, unbundling is the opposite, splitting bundled offers into smaller offers.  While the perceived value may seem less, if the quality of the unbundled offer is superior, the unbundled option will seem more attractive to consumers.

These two concepts, however, aren’t just limited to products, but also to industries, practices, and just about anything that can be grouped and separated.

Why Would I Use In My Business?

Using the processes of bundling and unbundling helps create different types of value for a variety of customers without having to create something entirely new.  Having two or more related products/services sold together may coerce a customer that otherwise wouldn’t be persuaded by any one service sold apart.  Vice versa, a customer that only wants a single item may be willing to go with a competing company if the competitor offers only the service or product that the customer is interested in versus a bundle.
Examples of Bundling

We can abstract this concept into the real world by taking a look at industries that have used bundling and unbundling extensively:

  • Internet Service Providers (ISPs) offer package deals, including cable television, mobiles and greater bandwidth on your service.
  • In restaurants, side orders are commonly priced cheaper if they’re purchased with an entree item. With meals being discounted when combining multiple elements together.
  • The music industry constantly bundles and unbundles material. Offering an unbundled single versus a bundled “Greatest Hits” collection creates value.  With services like Spotify, the digital distribution of music unbundles concepts like physical media.

To truly utilize bundling and unbundling, take a look at your business and your industry.  Are there products and services that you can offer as a package to increase their mutual value?  Are their groupings that would better accommodate more selective consumers if you offered them separate? In your particular industry, try to see what is normally sold together and ask whether you could find a way to separate them into a sellable niche.  On the other hand, look for opportunities where you can offer combined products and services to add convenience and value for customers.

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