The profit benefits of bundle pricing of complementary products

Ruiliang Yan and Subir Bandyopadhyay

Journal of Retailing and Consumer Services, 2011, vol. 18, issue 4, 355-361

Abstract: In an attempt to provide a framework that can help firms find optimum bundling product categories and pricing strategies that maximize their profits, this study develops a profit-maximization model. The results indicate that optimum bundles and price strategies exist; specifically, if a firm uses a bundling strategy to sell its products, it should combine highly complementary products and charge a relatively lower price. The value of a bundling strategy always increases with the size of market and price sensitivity. Managers can use the provided model framework and related advice and examples to plan their bundling strategies.

Keywords: Bundling; Product categories; Pricing strategy; Marketing research (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joreco:v:18:y:2011:i:4:p:355-361

DOI: 10.1016/j.jretconser.2011.04.001

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