Bundle pricing works when buyers value the parts differently

Bundle pricing means selling two or more products together for one price, usually less than the parts would cost separately. A bundle pricing strategy earns more when buyers value the pieces differently, because one package price can capture more of what each buyer would pay in total. It earns less, and starts hiding what your product is worth, when nearly everyone wants the same piece and the rest is padding.

Pure bundling sells only the package; mixed bundling also sells the parts

Economists split bundling into two kinds, a distinction that goes back to William Adams and Janet Yellen's 1976 paper "Commodity Bundling and the Burden of Monopoly" in the Quarterly Journal of Economics. As Nicholas Economides summarizes it, in pure bundling the goods are sold only in combination, and in mixed bundling the goods are available individually as well as in the package.

Adams and Yellen compared three options: selling the parts separately, pure bundling and mixed bundling. In Yannis Bakos and Erik Brynjolfsson's description of that work, the paper treats bundling as a way to charge different buyers different effective prices, and illustrates that which option earns more depends on what each unit costs to make and on how buyers' valuations are spread. Both points come back below.

Most software bundles you see today are mixed. You can buy the suite, and you can usually buy at least some of the pieces alone at a higher combined price.

A made-up example shows why one price can beat two

Here is a made-up example. You sell two add-ons to physical therapy clinics: a reporting module and a scheduling module. Two clinics are interested, and each knows what it would pay per month.

• Clinic A, a busy practice that answers to an insurer, would pay $60 for reporting and $30 for scheduling.
• Clinic B, a two-room practice with a chaotic calendar, would pay $30 for reporting and $60 for scheduling.

Price each module separately and your best option is $60 each: Clinic A buys reporting, Clinic B buys scheduling, and you collect $120 a month. (Dropping to $30 sells both modules to both clinics, which also comes to $120.) Offer both together for $80 and both clinics buy, because each values the pair at $90. That is $160 a month, by our calculation.

The bundle works because the clinics' preferences mirror each other. One price lands under both of their totals even though their favorite module differs.

Now add Clinic C, a large group that would pay $70 for reporting and nothing for scheduling (it already has a scheduling system it hates but cannot leave). A pure $80 bundle loses Clinic C, since the pair is worth only $70 to it. Mixed bundling keeps it: sell the bundle at $80 and reporting alone at $65.

All figures are by our calculation. The mixed version wins because the standalone price is set high enough that A and B still prefer the bundle (A values reporting alone at $60 and B at $30, both under the $65 price), while C gets the one thing it wants.

Short version: look for buyers whose favorite piece differs. That pattern is what makes a bundle pay.

Bundles stop paying when everyone wants the same piece

If every clinic would pay $60 for reporting and $5 for scheduling, a bundle adds almost nothing. You are charging for reporting and throwing in scheduling, and buyers can tell. Worse, you have taught them that scheduling is worth about zero, which makes it hard to sell later.

Cost is the second limit. Bakos and Brynjolfsson, in a 1999 paper in Management Science, argue that bundling large numbers of unrelated information goods can be surprisingly profitable because a buyer's total value for a big bundle is easier to predict than their value for any single item. They also say the result does not extend to most physical goods, because the cost of producing items a buyer never uses cancels the benefit. Their working paper puts it plainly: the benefits of bundling are greatest when marginal cost is very low.

For a B2B company, services behave like physical goods. Every onboarding hour, training session or strategy review in your bundle costs you staff time, whether or not the customer would have paid for it. Bundle software features freely. Bundle services only when nearly every buyer uses them.

Big bundles hide what each part is worth

The predictability that makes large bundles profitable also blinds you. If every customer buys the suite, you never learn which piece they are paying for. That question tends to come up at the worst time: at renewal, when procurement asks for a discount, or when a competitor sells the one piece customers care about at a lower price.

Microsoft's Teams is the clearest public case. The European Commission opened an investigation in 2023 into whether Microsoft was tying Teams to its Office 365 and Microsoft 365 business suites, and on September 12, 2025 it accepted binding commitments in which Microsoft agreed to offer versions of the suites without Teams at a reduced price, according to the Law Society Gazette's report. Most of the commitments run for seven years.

Microsoft's US business pricing page now lists both versions, per user per month, paid yearly:

Microsoft's Teams comparison page lists Teams Essentials, a standalone Teams plan, at $4.00 per user per month, paid yearly. By our calculation, Business Basic without Teams plus Teams Essentials comes to $9.40, which is $2.40 more than Business Basic with Teams. The two Teams offerings are not necessarily identical in features, but the shape is textbook mixed bundling: every part has a price, and the package costs less than the parts.

You will probably never face a competition regulator. The lesson still applies at startup scale: if customers cannot see what each piece costs, a competitor selling one piece can argue you are overcharging for it, and you will have no number to point to.

In B2B, publish a price for every piece you bundle

Mixed bundling solves most of the hiding problem. Give each component a standalone price, even if almost nobody pays it. When procurement asks to remove a module, you have a defensible number instead of an awkward negotiation from zero.

Matching a competitor's bundle has its own trap. In a model of two competing firms selling complementary goods, Economides found that mixed bundling was the dominant strategy for both, yet when the two firms' packages were not very close substitutes, both ended up worse off than if both had committed not to bundle. He calls it a prisoners' dilemma: each firm bundles because the other might, and both earn less.

Test a bundle with buyer interviews before you run a survey

Interviews tell you whether the pattern from the clinic example exists in your market. Ask eight to ten buyers these questions:

1. Which of these pieces do you pay for today, from us or anyone else, and what does each cost?
2. If your budget for this were cut by a third, which piece would you keep?
3. Who approves spending on each piece? Is it the same person?
4. What would you do instead if this piece did not exist?

Then sort the answers into a simple grid of buyers against pieces. If different buyers keep different pieces, a bundle will probably raise revenue. If everyone keeps the same piece, sell that piece well and price the rest separately. If different people approve each piece, expect the bundle to stall in procurement while two budget owners argue about who pays.

Treat any amounts buyers mention as ceilings, not prices; stated willingness to pay tends to run high. Once the interviews point to a promising bundle and you can reach a few hundred qualified buyers, conjoint analysis can measure how much the bundle adds against its parts. If the bundle will become one of several plans, tiered pricing covers how to design good, better and best tiers.

Your next step

Write down the two or three pieces you are thinking of bundling, then ask buyers which one they would keep. Instant Expert can find people matching a description such as "operations managers at physical therapy clinics who choose practice software." You review who it finds, it sends your paid invitations, and you pay only for calls that get booked or questions that get answered. To pressure-test the bundle design itself, talk to people from the pricing and packaging changes and pricing strategy consultants directory pages.