Basics. / Definition / Scope / Unbundling

Unbundled Pricing

This is a blog to track my independent research on unbundled pricing. For the scope of this study I am defining unbundled pricing as,

Identifying individual components that have a cost and value associated with them and pricing them separately.

The breakdown into components should be recognizable by the custmer and they should add value even though the customers may not perceive the value due to current bundling.
To see unbundling in context, I offer you the following examples:

  1. BART tickets are sold based on mileage and they do not offer unlimited travel monthly pass. So every use, every mile traveled is priced and charged. BART is doing unbundled pricing for tickets.
  2. In European restaurants, table service is charged separately. So you could choose not to pay by eating at the counter. These places also charge separately for bread and sometimes even tap water. Compare that to restaurants that throw in free bread, chips, etc. European places are practicing unbundling.
  3. LinkedIn, a professional networking site, offers free membership to all. But it also offers a monthly subscription fee based service with value added features. One thing LinkedIn has done is the option to use some of these features on a pay-per-use model for those who do not want the full subscription. For example, anyone can use their “Send IN mail” feature at the cost of $10 per use.
  4. Korean gaming compnay Nexon has made their online gaming site free for gamers. But they sell invididual game items, from weapons to costumes at a price ranging from few cents to dollar. Nexon has unbundled its service.

Over the next twelve weeks I will be studying this pricing model by looking at current cases and academic research and formulate a recommendation for marketers. I will publish a free report on my findings and recommendations. A separate Google site has been created for this study. All references and supplementary readings will be available on the site. However, access to the site is by invite only. If you would like access, please let me know.

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