Do you have any frameworks for discerning pricing and packaging of single vs bundled solutions? What about consideration around early adoption pricing, seasonal discount, and/or trial to purchase conversion incentives?

Question

Ajit Ghuman · Accepted Answer

There are a couple of questions here. Let me address the question of single vs bundled solutions.

Why do sell something standalone vs in a bundle?

Its about the right offering , for the right buyer/market segment. These offers are the right combination of feature-sets, services, and price for a market segment that will ensure that you can derive the maximum possible value from within that segment.

The goal of establishing a pricing model is to standardize 'packages/offerings' that allow your firm to run a sales engine that helps you maximize revenue across multiple segments of your market.

An easy framework/approach here is to think about your market.

1. If you have a large market, where buyers are homogenous in their use of your product: In this case selling multiple product tiers such as a Good-Better-Best would work well to maximize returns from the market. This is because the different tiers sit at different price points across small, mid-size and large customers. 
 2. If you have a small market, where buyers are homogenous: In this case you may not need to have multiple tiers and could probably do with fewer tiers and the ability to add-on features/modules. 
 3. If you have a large market, but your buyers/use cases differ and are hetrogenous: In this again modular packaging (also called the Chinese menu approach) is likely to work well since you can create an offer based on varied use cases, much like lego blocks. The Good-Better-Best approach may not work well here since the needs to the customers are more varied.

I hope this helps.

If you are interested to learn more, I cover this concept at length, with examples in book, Price To Scale.

Christy Roach · Answer

1. For single versus bundled solutions I usually make a process for the PM & PMM to determine:
     1. The goals for the feature in usage and revenue
     2. What the best customer experience looks like and our recommended usage path, as well as what the customer experience looks like for users if they only use one product
     3. Data and modeling about what each pricing decision will do for our overall revenue and how that fits with our goals (this isn’t always required but is for big decisions)

2. Early adoption/discounts/trial conversion incentives: My biggest framework and advice here is that you test your way into what works for your company. You should be running frequent tests and experiments with your pricing as a whole and specifically on incentives to be able to understand the impact it has on conversion, adoption, monetization and more. Use the readout on results from each experiment as the litmus test for scaling up or discontinuing.

Jackie Palmer · Answer

I've usually taken the approach that a product bundle should have at least a slight discount as an incentive to purchase the bundle. Many times people want most but not all of the products in the bundle so it is usually nice to give them some small discount, like 5% or 10% off the unbundled price. Bundles are usually stickier too so in the long run you make up for the discount. You can also take the approach of the more products you buy the bigger the discount. I once worked at a company that had 5 main product lines. Our bundled pricing was 3 products bought at the same time got a 20% discount and 4 or 5 products purchased together got a 30% discount.

To incent customers to be your early adopters, you often have to give them either preferential pricing or delayed pricing (try it for 3 months free for example). You want their feedback and participation so you want to make sure you give them enough incentive to become early adopters. I would also make a case study, quote or testimonial a condition of this incentive so that you have some proof points you can publish when you do go GA beyond the early adopters.

Trial to purchase incentives are often time-based rather than discount-based, like the option to try it for 3 months free. I would not give any monetary incentive other than that free time period for a trial, unless it was a paid trial where you could give a slight discount beyond your normal approach.

Related Ask Me Anything Sessions

Square Head of Product Marketing, Square Staff, Amy Loh on Pricing and Packaging

Amplitude Director, Product Marketing, Nate Franklin on Pricing and Packaging

Demandbase VP Product and Industry Marketing, Jackie Palmeron Pricing and Packaging

Related Questions