Pricing and Bundling: A New Paradigm?
If you’re an Amazon Prime member (and given the numbers Amazon reports, you probably are), you’ve got a bundle of benefits that go far beyond the basic free two-day shipping that was the original premise and promise.
The Amazon strategy that has played out over the past few years reflects an intriguing approach to pricing — bundling a suite of benefits that each on its own has substantial value — to justify the overall annual Prime service fee. Aside from the free two-day shipping, there’s a wide array of music, data storage, and free movies — as well as pricing and delivery benefits at some Whole Foods locations. These are not just trifles — they are substantial benefits. As a Prime member myself, after my first year I did the math to see if I saved money — but I don’t bother any longer because of all these other benefits.
We are used to seeing bundles in other industries. The cable business has done this by bundling together three disparate offers: bandwidth, phone service, and content. The travel business has offered bundles (which they call “packages”) — trips that include air, hotel, and tours can be booked on airline and discount travel sites easily. And as the big content creators jump into offering streaming services (Apple and Disney recently announced new services), consumers may be able to buy bundles of streaming content, such as ESPN + Disney + MSNBC.
Let’s think about pricing in our field — particularly with regard to subscriptions and memberships. With these, you get the fundamental benefits: In a reserved seat event, you can pick a seat that you like and retain it year after year. And for membership-based organizations such as museums, you get unlimited free access and the emotional and community-oriented benefit of belonging and knowing that you’re helping support the organization.
In the arts today there are frequently what I’ll dub “throwaway” benefits — a 10% discount or a free glass of wine at restaurants or 10% off purchases at the gift shop. Personally, I can never remember which restaurants offer discounts at the time of the show, and then I quickly forget that I have these benefits at all.
But what if we took the Amazon approach and bundled a set of really valuable elements that you couldn’t possibly forget? Rather than 10% off a meal, what if your ticketing bundle included a three-course meal with wine? Or perhaps you could bundle a round-trip limo pickup? What about including a physical item — such as a pair of high-end headphones?
Of course, the bundle would be substantially more expensive than the tickets alone. But we already know that there’s very little price resistance at the top end of the market. So why not go high and come up with a “platinum bundle,” something that really grabs your patrons’ attention?
These ideas are just meant to start your thinking — and I challenge you to think even more creatively. I suspect that the more unusual the idea, the more it will catch on.
If your organization is doing something like this now, or if you’ve ever bought a bundle like this in the past, I invite your comments below. Could this be a new approach to selling the arts that will make a difference? Time will tell. What we do know is that our world is clearly embracing bundled offers like never before.