Bundled Pricing: Art or Science?
Magicians can have a much longer career if they can keep their secrets. So when Chris Dixon wrote How bundling benefits sellers and buyers on his blog this month, it occurred to me that the gig might be up. Alas, my work continues. His description and analysis is -- in my opinion -- very easy to follow, but knowing how it's done and actually doing it are such different challenges.
Organizations are not very good at this concept. Most member-based associations I work with give everything away for cheap and then complain that no one values what they provide. Sure, they are bundling already, but you can't build value into bundled products or services if you don't value them first.
Their are many ways to estimate something's value. You could keystone it like a retailer, but I find this as lazy as a fair share model. I imagine that a committee got together to investigate, and the chair (likely representing the smallest business) mandated that everyone will kick in for each person they employ. And so began a century of bad pricing habits.
Bundles and tiered pricing isn't new. (Ever order a "number 2, large, with a Coke"?) But it's new (ish) for associations. You can tier lots of things: dues, sponsorship, individual services, quantities... lots of things. The art comes in identifying which combinations of services yield 30% more sales instead of 50% less.
If you're worried about losing your shorts on a new business model for your organization, first make sure you're wearing shorts worth keeping.