Subscription models have become the holy grail of customer retention and revenue streams. To compete, you must continually evolve and optimize your subscription pricing strategy.

As part of our virtual event, Subscription pricing & packaging: How to optimize and implement, Matt Lindsay, CEO of Master Economics, and Niraj Naik, Recurly’s VP of Product Management, shared how a one-size-fits-all approach may be counterproductive to your subscription pricing model. 

Enter subscription bundles–a promotion technique in which several products are put together and sold at a single price.

While stand-alone subscription products have proven to be an effective way to offer ongoing value, a carefully curated bundle of subscription services often represents an even more appealing proposition for both brands and consumers alike.

Understanding the power of subscription bundles

Subscription bundling is less about throwing products together and more about crafting an experience that feels tailor-made for consumers. The New York Times, for example, earned 10 million subscribers as a thoughtful and calculated strategy for subscription bundling.

Well-crafted bundles can reduce subscriber churn, making them sticky and less likely to unsubscribe. Plus, consumers are less likely to cancel individual services within a bundle, which locks in that revenue for the long term.

The challenge, though, is creating bundles that resonate with your subscriber base and add more value than the sum of their parts. 

Designing the right offer: The anatomy of a winning bundle

A successful bundle is it's a narrative, a lifestyle, and a statement that resonates with consumers. Here are three aspects to consider:

  • Comprehensive customer segmentation: Observe consumption patterns and analyze shopping behaviors of customer cohorts. Based on these results, identify which offers would be appealing to your audience–your bundles must echo their demands and needs.

  • Value-oriented propositions: Once you've carved your segments, next on the list is your value proposition–why would these products be paired together? Quantify but also qualify the benefits. Show why your fitness app subscription pairs harmoniously with a dual-textured yoga mat.

  • Crafting the experience: Design and deliver an experience that excites–exclusives, early releases, add-ons, or simplifies life's complications. 

How do you actually pair two products together? Subscription bundling is an art and a science. There are three key strategies you should consider:

  • Complementary products: Pair items that are often used together or would naturally complement each other. For example, a coffee subscription and a french press.

  • Component bundles: Combine multiple items into a new product, like customizing a mountain bike. For example, a social media management platform that also offers employee advocacy tools.

  • Discovery bundles: Offer a mix of your most popular services along with newer, less-known ones to encourage your subscribers to try more of your offerings. For example, a beauty box that sells a perfume sample at a discounted price.

The right bundle strategy depends heavily on understanding your customers' behavior. Analyzing purchase histories, engagement data, and survey feedback can provide valuable insights into what would make an attractive bundle.

No matter what kind of bundle you offer, it’s important to remember that the goal is to provide more value for your subscribers and to drive more revenue for your business.

Pricing considerations for product bundles

Should your subscription service be the lowest-priced alternative to succeed? The answer lies in a strategic head shake. Your pricing isn't a singular axis of competition; it's the three-dimensional middle ground where product value, customer perception, and market positioning converge.

  • The anchoring tactic: Just as an anchor secures a vessel, an anchor item solidifies your perceived value, sets the expectations, and justifies the rest of the package.

  • Tiered upsell dynamics: Tiering paints a picture of ascending benefits. It not only caters to different financial affluence but is also an artful stage for upsell tactics.

  • Dynamic pricing for evolution: Subscriptions are as dynamic as the customers behind them. A dynamic pricing model accommodates customer growth and switches, ensuring that your bundle continues to thrill your consumers.

Measuring the success of your bundles

Regularly monitoring and measuring the performance of your bundles is key to understanding what's working and what isn't. Look at key metrics like customer acquisition cost (CAC), customer lifetime value (CLV), and churn rates for bundled service subscribers.

Based on the data, you might need to tweak your bundles or pricing. Perhaps one service isn't performing as well as expected, which might warrant a substitution, or maybe there's an opportunity to introduce a new level of the bundle. Keep an eye on customer feedback and adjust your bundles to continually offer the maximum perceived value.

Get more insights on subscription pricing strategies

Constantly optimizing your subscription pricing model requires a holistic understanding of customer behavior and engagement levels. But with the potential to unlock new streams of revenue, retain more customers, and create a more personalized experience, bundles a strategy well worth the investment. 

Get more pricing and packaging insights in our on-demand event: Subscription pricing & packaging: How to optimize and implement.