Grouping products or service offerings can be a great way to:
- Seed your existing market with a new product without a costly sales program.
- Create a new market for a existing product in combination with a new product.
- Clear inventory of current versions in preparation for new product versions.
- Extends the life of one or more signage products.
While this has been a marketing staple in the software business for years, it can work for other types of products and services as well.
To be fair, packaging works well in other businesses too: hair care products are often sold in shampoo and conditioner packets; books and music CDs are sold in sets; Dishes are offered with accompanying accessories.
What is a package?
What makes a package, well, a package? Generally, a package consists of two or more products that share some characteristics or that can be used to solve different problems for the same target customer. I’ve already mentioned some of the more obvious examples, but let’s consider some not-so-obvious examples.
Example of professional organizers
If you sell your services as a clutter coach or professional organizer, you might consider bundling a few products with your services:
- Desk accessories
- Office supplies
- Cleaning supplies
Of course, these are products that would be fairly easy for the customer to obtain on their own, but why not add them to your offering? You can deliver the products to your clients when you come to carry out your consulting tasks, saving your client a trip or even preventing them from ordering the wrong or too many, insufficient supplies, etc.
You can even work with an office supply company to provide you with the products at a discount. Or look for providers who are willing to private label supplies with your logo and company name.
The example of common computer hardware
When you sell computer equipment and facilities to a small business, why not include a service package that provides a monthly cleaning, backup, and troubleshooting service? Training package. Offer a supply of blank DVDs or online storage for backup. What about cleaning supplies and paper for laser printers?
You know your customers will use these products, so why not provide them for their convenience? Save your customers the hassle of ordering items from another supplier.
One of the problems that I already hear you mention is: “But we already offer a service contract and we cannot get people to accept it.”
Of course, no! We all hate being tampered with and toned down, which is why extended warranties and service contracts get such a bad rap. If you made enough profit on your products and services, you could simply provide the service contract as part of the deal, and even call it a free bonus. Spread the cost across your entire product line and you won’t increase your prices by much. And you’ll make up for the additional expense through regular upsell opportunities.
A friend of mine once wrote and sold a software program that helped companies monitor and identify performance bottlenecks in their database applications. Once a customer knew where the problem was, they could write a script to fix the problem. My friend wrote 25 scripts that would fix the most common performance problems in the most popular databases. As an incentive, you would provide those scripts to anyone who bought your product within a certain time limit.
Issues to consider
If you decide to group two or more products, consider the following issues:
- If you discount your package relative to the cost of the individual components, be sure not to discount so much that you actually lose money on one or more components.
- If you charge more for the package than the customer would pay for the components, add value by including a brochure or some kind of service.
- Make sure your follow-up procedures are in place. If you offer continuous service, you must be prepared to provide that service on a consistent basis. If you offer products that need to be restocked, clarify the terms of the agreement for the customer: If you will be charging for the restocked products, get approval in advance.
- Keep packaging simple unless you intend to create a long-term product that needs its own packaging. Software product bundles often have their own special packaging, but the Leaky Faucet first aid kit probably doesn’t.