Let's talk a little bit about bundling versus a la carte.
This is another area where photographers can’t seem to figure it out. They start losing their minds, and here are the arguments that go back forth (we’ll pro/con some of this). To me, one method signals value (remember, signaling is important), and the other signals cost. You have to understand, this is human behavior. It’s psychology. Bundles are better for your business.
Here’s why: At first, a la carte pricing seems super simple. However, data shows that it creates confusion and ultimately lowers your overall sale. This is about what’s better for you and your business.
But, “I just everyone to be happy.” I have news for you: You are not in business for everyone to be happy. You need money to run your business. Bundles are going to result in higher profits. Data shows that when consumers are looking at a la carte pricing, they start turning their brains into human calculators. So, rather than making bigger decisions because of value and an all-inclusive deal, they’re making calculator decisions.
“Well if I add this, that’s going to put me over $1,000.00. I don’t want to spend more than $500.00 here”, and then they start doing anything to get to that price mentally in their head. There is nothing pulling them up to spend more saying, “Hey, yeah I know you wanted to spend $500.00, but look at this value bundle that I’m putting in front of you, where if you spend $1,000.00, you get $2,000.00 worth of value.” That will be a reason for them to spend more, so you have to understand the psychology behind this.
Bundles build on the concept of saving money.
Again, this is proven stuff. Bundles will increase your profits by 15-30%, because they push customers to spend more. You’re mixing different products in that bundle; some of those may have higher margins than others, but higher perceived value. They see more value in it, so the bundles build on this concept of saving money which is also important to understand. It offers structure with anchor products. An anchor product is that one thing we know everyone wants. So in my world, the world of professional photography, albums and digital files are anchor products; I know that’s what my clients want.
Well, you are going to have to pay for that. Other things, like maybe a web gallery (which doesn’t cost me anything) has significant perceived value. Now, the clients’ images are online for all their friends and family to see. A slideshow music video that we can make with their images has perceived value, but costs me little to nothing. In the end, I’m making more profit on that kind of stuff.
Your product mix here is key. This is what’s most important. What are you offering to your customers? That becomes really, really important. Now, small/medium/large is my philosophy when I’m working bundles; small package, medium package, large package. This is what you want to do when you’re going to star building bundles, regardless of the industry you’re in. This is not just a photo industry thing. This is consumer behavior in every industry. Go to McDonald’s, they have bundles. Your insurance company, they have bundles. Buying a new car? They have bundles. Everyone has bundles. Where they’re bundling services, they are making it easier for you to spend more money.
We have to embrace that same concept and stop resisting it. Now, I say small, medium, and large. That’s the way you want to put your bundles together, and put your most lusted-after product in your middle and top packages to get them to spend more. You don’t want to put your best items in the bottom package—that’s not really a bundle. You shouldn’t be discounting that bottom package.
“Can they buy a la carte?” This should be one of your questions. Of course. I think it’s really shady if you don’t allow people to buy a la carte items in your business. You can offer the customer an a la carte selection, but it should be at a higher price point. So if I add up all of the a la carte in a bundle, they should equal the value of the bundle.