PowerFrameworks is a website that offers Microsoft PowerPoint frameworks for visually showing concepts. Their pricing strategy stands out as an example of pricing done right. Their pricing is a very good example of product unbundling and pricing the unbundled components separately. What they sell it as a subscription service with recurring revenue. Their pricing is … Continue reading
Category Archives: Bundling
Going from unbundled to bundled
The reference price experiment my colleagues and I conducted recently, proved our hypothesis that people do not like unbundled pricing because their reference price for these was $0.00 but can be nudged towards unbundled pricing if their reference price can be improved. But what if the marketer who offered unbundled option wants to shift the … Continue reading
Unbundled Pricing Cannot Be Lower Than The Monolith
Unbundled pricing should be about exposing revenue opportunities and capturing part of the value created to the customer. The pricing should be such that the sum of the price of unbundled components should be greater than or equal to that of the monolith. Otherwise customers are incented to go with unbundled option and the marketer … Continue reading
Unbundling the dressing from the salad
Most health conscious people order a salad with dressing on the side or with no dressing. But the price quoted for a salad in any restaurant includes dressing. In other words the sald and dressing were seen as a monolith by consumers. Whether you like the dressing or not you pay for it in the … Continue reading
Times Reconsidering Fee To Read Plan
The New York Times still offers a completely free to read online version. A few years back Times unbundled their online offering and tried to charge $50 for access to their Op-Ed columns. Times branded the offering as Times Select. Even though the Op-Ed columns were unbundled from the rest of the newspaper, all of … Continue reading
Bundling – Amazon Prime
In my previous post I wrote about exposing new revenue opportunities through unbundling. The case we looked at was Amazon.com and the opportunity for it to unbundle its free shipping service into order processing and shipping and sell faster order processing for a price. Amazon.com is also a price innovator in many ways. It found … Continue reading
The Pricing Story
This study has been focusing on unbundling, doing it as a strategy and not as a reaction to economic conditions. I recently read an article by author Seth Godin, who recommended changing the pricing schemes for certain services. He recommends bundling for previously unbundled services and unbundling for some. One good example of unbundling that … Continue reading
Incremental Analysis For Unbundling
Before deciding to unbundle a product or service, the firm must do an incremental analysis to see if this adds net positve value or not. Before unbundling, the product had one demand curve but after unbundling the components will have their own demand curve based on customer preferences and in most cases will have no … Continue reading
The Effect of Costs and Economies of Scale on Bundling
Stremersch and Tellis make this proposition in their paper on Strategic Bundling. P10: The profitability of price bundling is likely to be higher than that of unbundling (a) the higher the relative contribution margin and (b) the stronger the economies of scale or scope. Relative contribution margin is the ratio of price less variable cost … Continue reading
Getting The Definitions Right
This is an attempt to get a more precise definition of Bundling and Unbundling. To add to the definition mix, there are different two kinds of bundling, Product and Price Bundling. The definitions here are based on “Strategic Bundling of Products and Services” by Stefan Stremersch & Gerard J. Tellis. The definitions are lifted verbatim … Continue reading
Unbundling As a Pricing Strategy 