What is a main business reason to offer different products together as a bundle?

The main business reason to offer different products together as a bundle is to maximize overall revenue and profit by strategically influencing customer purchasing behavior and enhancing the perceived value of the combined offering. This approach capitalizes on the fact that customers often have varied willingness to pay for individual products and for combinations of products. One significant benefit of bundling is to increase the total sales volume and average revenue per customer. By presenting multiple items as a single package, businesses can encourage customers to purchase more products than they might have bought individually. The bundle often creates a perception of higher value or a more attractive discount compared to buying each item separately, making the overall offer more compelling and stimulating additional purchases. Another crucial advantage is the ability to capture more consumer surplus through a form of price discrimination. Consumer surplus is the difference between the maximum price a customer is willing to pay for a product and the actual price they ultimately pay. Bundling allows a business to cater to diverse customer preferences and varying willingness to pay across different items. This strategy enables the business to extract a higher total amount from customers who value the combined offer, effectively increasing the total revenue generated from each customer by satisfying more of their needs within a single transaction. For instance, a software company might offer a bundle that includes a popular core application and a less popular, but complementary, utility. Customers primarily interested in the main application may find the additional utility in the bundle to be a beneficial inclusion, perceiving a better deal, while the company ensures sales of the less popular item and captures a higher overall purchase value. Furthermore, bundling is particularly effective for complementary products, which are items that are commonly used together. Offering such products as a bundle simplifies the purchasing decision for the customer, ensures they acquire all necessary components for optimal use, and helps secure the sale of all related items that might otherwise be purchased from different providers. This enhances customer convenience and locks in more of their spend with the bundling company.