Guide to product bundling for SaaS

The common goal of all SaaS businesses is to grow revenue profitably. And to do that, businesses are looking for more strategic ways to increase their revenue streams.

Rather than selling individual point solutions, well-designed product bundles allow SaaS companies to capture greater customer mindshare, wallet share, and lifetime value relative to the competition.

Deciding how to price and bundle your products is crucial, whether you’re launching a new offering or trying to respond to current customer demands. This is especially important for SaaS because your customer is entering into a recurring relationship with you and you want to continue to deliver the value they expect with your product bundles.

Product bundling gives businesses the advantage of increasing revenue while delivering customers the best products or services.

What is product bundling?

Product bundling is a pricing strategy used to sell a group of related products or services as a single unit or a package, and is very common with SaaS companies. This model ensures that the entire bundle of products sells at a lower price than selling the individual items separately.

The purpose of product bundling is to motivate customers to make more purchases, which results in higher sales for the company.

There is some debate about whether bundled products should be considered cross-sells or upsells. Regardless of which category a bundle falls into, the goal for a business is to sell more, save money on promotion, and provide additional value to their customers to improve retention.

Why do companies bundle products?

Companies strategically bundle products to capture greater value and drive competitive advantages in several ways. Product bundling allows businesses to provide customers with solutions that offer more ease, relevance, and savings. It also simplifies business processes on the production side—shared resources, distribution channels, and economies of scale unlock cost efficiencies.

Thoughtful product bundling allows businesses to differentiate themselves in competitive markets through compelling value propositions. With careful balancing of volume gains against margin, bundles boost profitability. They also reshape positioning around understanding diverse consumer needs and enabling newer segment monetization.

Examples of product bundling

Here are various product bundling techniques to sell your products or services. The type a company uses depends on its goal.

Pure bundling
Mix-and-match bundling
Price bundling
Mix cross-sell bundling
Old inventory bundling
Occasional bundling
Post-purchase product bundling
Incentive-based bundling
Category-based bundling
Gift bundles
Subscription boxes
Related products bundle
Build your own bundles

Pure bundling

Pure bundling is when multiple products or services are combined into a package or bundle, and this bundle is the only product available for the customer to purchase. This means that customers have to purchase the bundle to have access to the items within it.

Key characteristics:

Products only sold as a bundle: Customers can purchase the product as a bundle, but it is unavailable separately.
Mandatory purchase: To access any single product, the customer must purchase the entire bundle.
Single price: The bundle is offered at one aggregated price instead of pricing for each product.

Examples:

Microsoft Office is bundled with Word, Excel, PowerPoint, and other apps.
Cable TV packages – Channels/content bundled into tiers like basic sports and movie packages.

Mix-and-match bundling

This type of bundling enables customers to select from various available products to create a custom bundle of their own. This bundling type makes customers responsible for determining what goes into their custom bundles.

Key characteristics:

Menu of options: The company lists separate products/services with individual pricing.
Customized bundles: Customers can choose products from this menu to create personalized bundles.
Flexible pricing: Total bundle prices adjust dynamically based on a mix of products added to the bundle.
Interactive process: Consumers actively participate in building their optimal bundle.

Examples:

Meal deals at restaurants: Customers combine food + drink by selecting options like main course, side dish, dessert, and beverage.
Computer hardware bundles: Custom configurations of processor, RAM, graphics card, storage, etc.

Price bundling

In this bundling type, you can combine products or services into a bundle by offering a discount and selling for a lower price than individual items. However, do not combine low-value products with high-selling products. Otherwise, customers may perceive your high-selling products as low value.

Key characteristics:

Price incentives bundling: The bundle pricing presents savings compared to the sum of individual prices.
Products are available separately: You can still purchase component products individually.
Flexible configurations: Customers choose which items to bundle.

Examples:

Fast food value meals: Upsize and extras like drinks and sides bundled for a discounted combo price.
Retail multi-packs: Lower unit pricing when purchasing multiple units, e.g., buy 2 shampoo bottles for $7 instead of $4 each.
AmazonSave X% on a purchase of 2+ eligible items: Mix and match clearance products that qualify for bundle discounts.

Mixed cross-sell bundling

Mixed cross-sell bundling is where customers are offered a complementary product from different categories or business lines to provide them with a broader, integrated solution. Often, customers can’t use this complimentary product as a standalone item. An example is how customers are offered a phone case deal when they purchase a new mobile device.

Key characteristics:

Complementary products: Items bundled serve joint purposes or enhance one another.
Cross-category: Bundled products are from different categories, markets, or business verticals.
Discounted pricing: Bundle pricing offers a discount over buying items individually.

Examples:

Microsoft hardware & software bundles: Surface Pro tablet bundled with Office Suite subscription.
Telecom service bundles: Internet, TV, and phone bundles from providers like Comcast, Verizon, etc.
Financial service bundles: Checking account + credit card + investment account bundles.
Subscription box services: Monthly bundles sampling cross-category products like clothing, beauty, snacks, etc.

New product bundling

In new product bundling, companies offer customers a newly launched item complementary to a high-selling, fast-selling, or popular product. This strategy promotes product awareness and adoption.

Key characteristics:

Leverages established product: An already popular, successful product has an existing customer base.
Introduces new product: A recently launched or soon-to-be-launched product still gaining awareness.
Bundled offering: The two products are bundled together as a package deal.
Discounted price: Bundle price incentivizes trial of the new product.

Examples:

iPhone launched with bundled earphones.
New video game consoles bundled with a popular game title.

BOGO bundling (Buy X Get Y)

“Buy One Get One” is a popular bundling technique amongst eCommerce businesses. It is a way to encourage customers to purchase a particular product at its exact price while offering them another product with significant discounts or as a gift. Sometimes, the original product might be expensive or a one-time use product. But this method allows them to effortlessly attract customers to purchase.

Key characteristics:

Purchase requirement: Customer must first pay full retail price for product X to trigger the bundling deal.
Added incentive: Get a second product Y at no extra cost or discounted rate.
Increase order value: Drives higher transaction values from the same customer.
Rotating offers: BOGO deals run for limited periods before changing.

Examples:

Retail BOGO: Buy one item, get the second 50% off.
Restaurant deals: Buy an entrée, get a free appetizer.

Old inventory bundling

This bunding method is used to sell off old stock to create space for new products.

Key characteristics:

Bundles slower-moving inventory: Products that have built up excess supply or are near end-of-lifecycle.
Limited time offers: Create a sense of urgency to clear old inventory.
Discounted pricing: Price bundles attractively to liquidate products faster.

Examples:

Fashion retailer bundles of clearance items.
Food retailer meal kits comprised ingredients nearing sell-by dates.
Toy retailer, holiday toy bundles sold post-holiday season.
Grocery bundles of seasonal produce post-relevant holiday/event.

Occasional bundling

Occasional bundling, or seasonal bundling, is a case where brands or companies offer customers a bundle package due to seasons, holidays, or special occasions. An instance is how flower stores create different packages for Valentine’s Day.

Key characteristics:

Time-bound campaigns: Bundles offered for set durations.
Seasonal bundles: Tie bundles to seasonal events like holidays.
Intermittent campaigns: Run 2-3 bundle campaigns per year.
Feature various products: Rotate different items into bundles.

Examples:

Starbucks holiday drink + food bundles are available only during the holiday season.
Fashion retail monthly product bundle specials.

Post-purchase product bundling

This bundling method lets you present your customers with deals after purchase. It refers to a customer retention strategy of surprising customers by bundling complementary products or services for free after they have completed a purchase. With post-purchase bundles, you can cross-sell or upsell your customers.

Key characteristics:

Initial purchase: Customer buys and is satisfied by product X.
Follow-up bundle: The company later provides free or discounted product Y.
Delightful surprise: Unexpected addition increases satisfaction.
Customer lock-in: Strengthens loyalty and brand affinity.

Examples:

Free trial membership bundled post-online purchase.
Free accessories bundled with electronics post-purchase.
Free insurance bundled with car purchase at the dealership.
Hotel bundles spa credits for next stay post-checkout.

Incentive-based bundling

Incentive-based bundling refers to combining supplemental products, services, or rewards as part of a package deal to add incremental value that incentivizes customers to purchase the bundle.

Key characteristics:

Core base product or service.
Added incentives bundled at discounted rates.
Incentives enhance offer attractiveness.
Lifts the perceived value of the bundle.

Examples:

Credit cards bundle sign-up reward points and cash back.
Telecom bundles include premium channel subscriptions.
New car purchases bundle free servicing, accessories.

Category-based bundling

Category-based bundling lets you put products or services in a specific category while offering customers a package deal. This bundling mirrors the “build your own bundle” system by grouping products or services into categories using the price-based model. However, they do not offer customers a lot of options.

Key characteristics:

Products fulfill a related consumer need or occasion.
Items bundled are from the same business category.
Provides convenience and completeness.
Discounted compared to buying individually.

Examples:

Nike bundles sports gear like shoes, shirts, and shorts for runners.
Makeup and cosmetics beauty bundles.
Toolkits with related items like drills, bits, fasteners.

Gift bundles

Gift bundles are often occasional or seasonal bundling strategies: pre-packaged bundles of complementary products marketed primarily as premium gifts for loved ones rather than for personal use. They are bundles with target audiences willing to buy or send gifts to their friends, family, colleagues, or loved ones on different occasions.

Key characteristics:

Curated selection within a theme: Spa, chocolate, baby products.
Presented as a single unified gift set.
Premium positioning: Higher-end packaging and products.
Priced higher than the sum of items purchased separately.

Examples:

Luxury fruit and chocolate gift baskets
Bath and body care gift sets from retailers like The Body Shop
Baby care multi-piece kits containing blankets, toys, clothing
Wine or craft beer packs bundled in gift boxes

Subscription boxes

Subscription boxes refer to a business model where consumers pay a recurring subscription fee, typically monthly, to receive shipments of bundled product samples or full-size products that follow an overarching theme or fulfill a particular passion or need.

Key characteristics:

Variety of themed boxes: There are subscription boxes for themes like fashion, beauty, food, books, toys, outdoor gear, etc.
Curated products: Products inside each box are carefully curated by experts or sometimes personalized to match subscriber preferences.
Scheduled delivery: The bundles conveniently ship to the customer’s doorstep on a recurring monthly schedule.
Product discovery: Trying new products and brands not previously purchased drives excitement.

Example subscription boxes:

Clothing rental subscriptions like Nuuly or Le Tote
Beauty and makeup sample boxes such as Birchbox, Ipsy, BoxyCharm
Meal kits with recipes and ingredients like HelloFresh or Blue Apron
Book club subscriptions that send reading bundles each month

Build your own bundles

Build your own bundle refers to a pricing strategy that enables customers to create their own customized combination of products and services in a bundle tailored to their specific needs and preferences.

Key characteristics:

Menu of bundle components: The company provides a range of individual products/services to select from.
Customization tool: An online configurator, product wizard, or menu aids customized bundling.
Flexible combinations: Customers choose the quantity and mix of components bundle.
Dynamic pricing: Total bundle prices update automatically based on selections.

Examples:

Build your own tech device bundles with choices of device, accessories, software, support plans
Customize cable/cell phone plan bundles by selecting data allowance, channel package, premium features
Fan experience bundles for events, allowing choice of extras like meet & greet, exclusive merch

How to create a product bundling strategy for SaaS

The following explains how SaaS businesses can create an effective product bundling strategy.

Understand customer needs and buying factors

The first step in developing effective product bundles for a SaaS subscription business is understanding customer needs and what drives their purchase decisions.

Understanding customer needs

Conduct thorough research with your customers, commonly through surveys, interviews, and support tickets.

Surveys: Send out surveys to subscribers and prospective customers inquiring about which product features or capabilities they consider high priority, what challenges they face, what they wish solutions did better, etc. Surveys give you quantitative data to analyze.
Interviews: Have phone/video conversations with decision-makers in your target customer companies to get qualitative, detailed insights into their needs. Ask why they chose certain products or what is limiting their performance currently.
Analyze support tickets: Reviewing support tickets or capacity gaps helps identify recurring issues and areas where additional products or services may provide value.

Identifying key purchase drivers

Key areas that research related to driving purchase considerations for bundles should cover:

Complementary products needed: What workflows, systems, or data require them to use related software products in conjunction? Bundles should integrate must-have complementary products.
Pain points to address: Where do customers face recurring pain or friction that negatively impacts key objectives? Bundles should provide capabilities to tackle these directly.
Desired business outcomes: What business goals related to revenue growth, cost optimization, or operational efficiency are they trying to achieve? Bundles offered should enable the outcomes customers want.

Develop bundles that align with customer segments

Building on the previous foundation, the next step is to develop bundles and align them to the needs of the specific customer segments or buyer personas your business serves.

The goal is to match product bundles to buyer values, complexity levels, willingness to pay, and desired business objectives across targeted customer segments.

This involves:

Segmenting your customers into different buyer personas
Tailoring bundles to each persona
Ensuring appeal aligns with persona values

Segment your customer into a different buyer persona

Group your customers into personas based on common needs:

Entry-level: These buyers are highly cost-conscious. The goal is to provide core required capabilities at the lowest viable subscription price.
Mainstream: This mid-market group seeks complete end-to-end solutions tailored to their industry and specific use cases.
Advanced: Enterprise-level buyers demand deep capabilities, predictive analytics, global scalability and premium-level customer support.

Tailor bundles to each persona

With defined personas, you can engineer differentiated bundles with combinations of products, features, and support priced and framed around serving each customer best.

For example, the entry-level bundle may focus exclusively on the 1-2 must-have apps with limited editions of value-adds to control subscriber cost.

Ensure appeal aligns with persona values

Persona alignment ensures the positioning, messaging, and mix of capabilities directly addresses what each customer values, allowing you and your customers to identify the appropriate bundle based on their needs.

Getting this right prevents a bundle from falling short of customer expectations and helps ensure that bundles grow with defined subscriber groups over time.

Structure bundles to incentivize desired outcomes

Now that you understand each segment’s needs, you want to determine the optimal product bundles to address those needs and buying behaviors by actively crafting bundles to incentivize customers toward desired purchase outcomes.

Offer customer incentives

Providing downstream discounts or concessions serves to make targeted bundles more financially appealing upfront to the customer. Incentives guide customers to purchase specific and often more premium bundles.

Percentage discounts: A common tactic is bundling discounts, e.g., 10% off the total for customers that purchase a 3-product bundle focused on analytics, personalization, and martech integrations.
Service credits: Provide credits for additional services as an incentive for choosing specific bundles.
Free product trials: Including full-capability free trials for certain premium products in a bundle lowers the risk for customers wanting to experience those key solutions. This is a popular approach for SaaS with product-led growth strategies.

Influencing purchases with key product incentives

Anchoring effect

Research shows that leading bundle marketing and pricing with the “anchor” product that customers already know they must have generates a halo effect that lifts the perceived value of the entire bundle. Anchor products cast all accompanying products in a more positive light.

Leading with the must-have product

Similarly, ensure the bundle includes the single pain point solution or capability that initially drives purchase interest and guarantees adoption. Must-have anchor products should pull in accompanying solutions.

Bundle recurring with non-recurring

Blend recurring physical products or digital services (for fixed-period access) with non-recurring tools, equipment, or downloads that customers only need to purchase once.

Multi-tiered subscription bundles

Structure your offer as Good-Better-Best bundles with increasing capabilities and incentives, pricing to appeal to broader customer segments with varying willingness-to-pay.

Bundling digital with physical

Combine digital access or information products with periodic physical merchandise shipments that complement digital content. It strengthens and provides tangible value to the bundle.

Allowing periodic bundle switching

Give subscribers the flexibility to upgrade/downgrade their bundle tier each billing cycle to meet their needs. This reduces friction and risk for customers, though it can complicate your revenue recognition.

Communicate the differentiated value of bundling

An impactful product bundling strategy must be supported by compelling messaging that clearly explains the expanded value bundles offer to customers versus individual point solution purchases.

Position your offering as the most frictionless customer journey available. Demonstrate how your unified bundle simplifies upfront decision-making and allows convenient purchasing, onboarding, and managing everything customers need in one place.

Always be optimizing for more sales

You want to make sure these bundles provide value to customers. So, you closely watch how bundles perform using different measures.

First, track sales, customer satisfaction, and renewal rates for each offering to see which bundles customers purchase long-term—also, survey customers on their satisfaction with current bundles and what additional products they need.

Next, dig deeper into why customer preferences change and talk directly to users to understand where they want improved capabilities or more suitable options. As their needs evolve, ensure that you stay on top of them.

Use all this performance data and customer feedback to improve your product bundles. Then, tailor your offerings to increase relevance to customers. Or even introduce entirely new targeted bundles aligned to market demand. This continual adjustment keeps value high.

How to sell your product bundles

Let’s examine some of the best methods for selling product bundles.

Create a compelling bundle

The most fundamental element is having bundles customers inherently see value in, with exciting differentiated products/capabilities meeting their needs better together than individual purchases could. Identify the anchor product they must have, plus great complements.

Clearly highlights savings and discounts

Ensure bundle price displays clear % savings versus the sum of individual product costs. People love quantifiable deals. Also, advertise any exclusive discounts, free trials or gifts available for enrolling in the bundle. Customers are always looking to save money while making purchases — which is one of the attractions of bundling for customers.

Set pricing strategically

Beyond outright discounts, stress limited-time offers with urgency, starter pricing that goes up on renewals, or split payment options that lower the initial dollar amount. Your goal with product bundling is to ensure that customers easily see the value in your bundles and to speed up the purchase process.

Use cross-selling techniques

For SaaS companies, upselling and cross-selling to your existing customers is just as important as finding new ones. Equip sales teams and account reps to present bundles as upsell opportunities on sales calls. Train them on identifying scenarios where bundles meet additional user needs or incentives to justify upgrading from individual products.

Create bundle-specific marketing materials

Dedicate bundle-focused landing pages, campaign assets, and catalog pages. Provide clear breakdowns of what’s included alongside illustrations of benefits users specifically obtain with the bundle.

Benefits of product bundling for business

Here, we look into some of the benefits product bundling offers businesses.

Increase sales and average order value (AOV)

Bundling drives higher one-time purchase revenue by selling more products together. It also increases lifetime value through elevated retention and recurring sales of bundle subscriptions.

Decrease inventory waste

Inventory is sometimes filled with old products, known as dead stock, with low or no sales. Fitting products together in bundles allows for selling off surplus inventory or slower-moving standalone items.

Saves money on promotion and distribution

Promotion and distribution can consume much of the company’s time and finances while it attempts to deliver a rich customer experience. But product bundling allows businesses to promote and distribute different products simultaneously instead of spending huge amounts of money on advertising and individual distribution.

For example, Paramount CEO Bob Bakish said bundling Paramount+ and Showtime into one service has created $700m in savings

Benefits of product bundling for consumers

Companies are not the only ones benefiting from product bundling. This section looks into some advantages consumers derive from product bundling.

Cost savings

This is the primary benefit of product bundles. Bundles provide financial value with a lower combined price rather than purchasing items individually. Discount incentives make purchasing more appealing without running out of budget.

Value addition

Not only do product bundles give customers better value for their money, but they also provide a more complete solution to your customers’ challenges, demonstrating value beyond the financial aspect.

Simplified decision-making

When companies use product bundles, they help consumers in decision-making. Pre-curated bundles reduce the time and hassle of evaluating separate products, condensing the selection process.

Exploration of new products

Product bundling can enable customers to try out new products for free or at a discounted rate. It also can give them the flexibility of benefitting from the features and functions of the latest products.

Enhanced affordability of premium products

Premium products can sometimes be expensive for customers. But, product bundling can allow customers to purchase premium products at a more affordable rate due to the discounts attached to bundles and other offers used by the company.

Reduces customer time spent on research

Customers spend a lot of time trying to get products that can work together for them. With product bundling, you naturally have access to complementary solutions for your needs. As a result, the buying process becomes smooth for customers.

Personalized customer experience

When you have a seamless and straightforward overall buying process, your customers have a personal feeling of being in charge of their purchases. This makes them commit to your brands, increasing customer retention and loyalty. This is because they assume the position of ownership through your distinctive customer experience. As a result, they keep returning to buy more from you.

Product bundling drawbacks to avoid

Now that you know the benefits of product bundling for companies and consumers, let’s examine some drawbacks you must avoid.

Forced purchases

Customers resent paying for bundled items they don’t want. Allow some flexibility or personalized customization to prevent this.

Limited customization

Pre-defined bundles can frustrate customers with unique needs if they are unable to specify desired options. If possible, introduce some selectivity.

Perceived complexity

Overly large bundles may seem complicated to evaluate or integrate if not cohesive.

Less transparency

Customers are not always sure how the product bundle selections are made. As the company manages this, there is reduced transparency regarding the value of what is in the bundle.

Examples of SaaS product bundles

The following are examples of big SaaS brands and their bundles.

Hotjar: Hotjar Observe (Heatmap + recording session) and Hotjar Ask (Survey + Feedback tool) + more

Hotjar, a user analytics and feedback tool, uses a product bundling strategy that integrates essential features for website optimization and user experience analysis. Hotjar bundled its heatmap and recording tool through its Hotjar Observe bundle and Hotjar Ask, a bundle of its survey and feedback tools.

By bundling these components, Hotjar offers a comprehensive solution for businesses seeking to understand and enhance their online user experience.

HubSpot: CRM Suite (Marketing Hub Professionals, Sales Hub Professional, CMS Hub Professional + more)

HubSpot, a leading inbound marketing and sales platform, adopts a holistic approach to customer relationship management. Their CRM Suite bundle includes marketing, sales, service, and content management hubs. This comprehensive suite allows businesses to integrate various operations seamlessly, fostering a unified and efficient approach to customer engagement throughout the entire lifecycle.

Atlassian (Bundle components: Jira (project management), Confluence (team collaboration), Trello, and more.

Atlassian, renowned for its collaboration and productivity tools, strategically bundles products catering to software development and team collaboration through its bundle package Atlassian Together. This bundle provides users access to the highest edition of the products, Confluence Enterprise, Trello Enterprise, Jira Work Management Premium, and Atlas Premium.

Adobe Creative Cloud (Bundle components: Photoshop, Illustrator, InDesign, Premiere Pro, After Effects, Acrobat, and more.)

Adobe Creative Cloud, a powerhouse in creative software, adopts a product bundling strategy that consolidates its industry-leading applications. To offer customers the best value, Adobe created Creative Cloud All Apps. It includes over 20+ graphic design, video editing, and document creation tools.

This strategy offers creatives more features for a lower cost. It improves the user experience and promotes interoperability among creative tools and functions, enabling users to transition seamlessly between various design tasks.

DropBox (Bundle components: Cloud storage, file synchronization, collaboration tools, and advanced admin controls.)

Dropbox, a cloud-based file storage and collaboration platform, strategically bundles features catering to individual and enterprise needs. Cloud storage ensures accessibility and security, file synchronization allows seamless collaboration, and advanced admin controls provide enhanced governance over data.

The Business Team plan represents the best value, bundling all the capabilities included in the Plus and Essential tiers while costing less overall. Moreover, the Business option grants access to exclusive, inaccessible features through the other two offerings.

Develop new product bundles quickly with the right technology

Quick iteration on product bundles and promotions can help SaaS companies respond to changing customer needs and preserve revenue. The right technology makes it possible to deploy these new offerings in minutes, without a huge engineering lift that contributes to future technical debt.

Learn how Zuora Billing can help you quickly experiment and pursue any subscriber growth or retention strategy with flexible pricing, packaging, and discounting options.