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Increase Sales through Package Pricing

By John Aberle | Pricing , Sales and Marketing

I recently encountered a vendor who could not understand one of the basic concepts in sales and marketing: people love a bargain and are inclined to buy more if there is a special. I’m sure you are familiar with this idea as many successful marketers create package prices to encourage buyers to purchase more. Interestingly, I’m usually at the other end of the spectrum wondering if merchants understand the other basic of business, i.e. that you have to make a profit (or at least break even) to survive.

Not everyone accepts the value of selling a package of products

One of the easiest ways to increase sales is to offer bundled packages. Yet the management of this company refused to give customers a choice of buying several pictures at a reduced price once they’d bought the first one. It would appear that they wanted the full profit on each sale.

Here’s the problem that comes from holding the line on prices in this unique case:

• They have a fixed number of prospects, only those attending this event.
• Their labor costs are already spent – I call this sunk costs – because the photographers already took the pictures “on spec,” i.e. hoping to entice buyers to purchase them, and already printed them up so the customers could see them.
• Their material costs to print up the pictures are also spent as the prospects wouldn’t purchase without seeing the pictures.
• Their overhead was a fixed expense regardless of how many pictures they sold.

Here is the basic profit formula:

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