Question

Define block pricing and bundling. Give one real world example for each strategy. Discuss why a firm would use such a strategy

Answer 1

Block Pricing : It is a pricing strategy in which identical products are packaged together in order to increase profits by forcing customers to make a decision . By packaging the products and selling them as per unit , the firm earns more than if it sold all of the units at per unit price.

Example of block pricing is the package of toilet paper given by the supermarkets to the customers , bundling the toilet paper into 24 or 48 units to buy or not to buy the pack, thereby making larger profits .

Product Bundling : In it , companies sell a package or set of goods or services for a lower price than they would charge if the customer bought all of them separately . Pursuing a bundle pricing strategy allows you to increase your profit by giving customers a discount .

Common examples of bundling are packages on new cars , value meals at restaurants , etc.