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Extra Features and Video Online FloristsReview.com R E A D O N L I N E 63 The U.S. Chamber of Commerce, located in Washington D.C., suggests another pricing option that can help increase sales and decrease losses: Bundle Pricing. "Bundle pricing" is defined as bundling two or more products together and pricing the bundle for less than the sum of the products' individual prices, and it is considered a good way to move a lot of inventory quickly. Further explanation by the U.S. Chamber asserts that "A successful bundle- pricing strategy involves profits on low-value items outweighing losses on high-value items included in a bundle." The Harvard Business Review (HBR), based in Boston, Mass., provides an alternative slant on the concept of bundle pricing, stating, "Common pricing practices like price bundling serve to mask how much a buyer has spent on a given product, decreasing the likelihood that the buyer will actually use it. And a customer who doesn't use a product is unlikely to buy that product again. Retailers who employ those pricing tactics without considering their impact on consumption may be trading off long-term customer retention for short-term increases in sales." HBR continues, " We found that price bundling influences consumption considerably. Quite simply, it is far easier to identify and account for the cost of an individual product in an unbundled transaction than within a bundled transaction. The one-to-one relationship between price and benefits in an unbundled transaction makes the cost of that item obvious, creating The Pros and Cons of "Bundle Pricing" a strong 'sunk-cost effect' and a high likelihood of consumption." As a final comment, HBR notes, "Research suggests that consumption is driven not so much by the actual cost of a paid-for product as by its perceived cost. This perception is influenced greatly by the manner in which the product is priced. Some pricing policies highlight the perceived cost of a paid-for product while other pricing policies mask the cost." Summing up psychological pricing, the U.S. Chamber points out, "Pricing your inventory properly is essential for business success. You may have the best product in the world, an excellent team and a beautiful storefront, but if you can't price your products effectively, your sales will ultimately struggle." 2

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