Bundling

Bundling is the practice of clustering together several complementary goods and services into a single package price that is lower than the sum of their individual prices. This is done when the group of offerings is considered to be an attractive package for a significant number of customers. It can be cost-effective for sellers, who can sell more products to existing customers, rather than incurring the considerable expense of acquiring new customers.

Bundling arrangements are usually considered to be longer-term, and so are not treated as a one-time promotion. These arrangements can increase the sales volume of a business, while keeping sales away from competitors.

As an example of bundling, a bank offers a free checking account when a customer agrees to take on a mortgage. Or, a computer manufacturer sells a mainframe computer that is bundled with a warranty plan and initial training package. As another example, an insurer provides a homeowner with both car insurance and homeowners insurance for a single reduced price.

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