The benefits of bundling for SaaS marketplaces
The concept of product bundling is not new. Does “Happy meal” ring a bell? You have probably bought a menu in a fast food or an anthology of songs: they are all bundles. We can certainly say that almost every market bundles products into package deals, and the software market is no different.
Softwares can be bundled for the benefit of marketplace owners, software vendors and customers.
Bundling: a definition
Broadly speaking, bundling is the combination of two or more products or services to create differentiation and enhance the offering to customers. Software bundles are product suits that combine multiple applications into a single package.
Bundling can be pure or mixed. Pure bundling means that the products can only be purchased together in bundles. Mixed bundling means that customers can purchase the entire bundle or one of the elements of a bundle.
When creating bundles, marketplace owners should keep in mind that bundles should solve a business challenge for their customers. It is not (only) a matter of costs: a reduced price is not enough to persuade customers. According to researches, consumers might actually value the bundle less than they would value the individual component products, that is there was a “negative synergy” associated with the bundle.
It is crucial that marketplace owners carefully select the single services that are included in the bundle. When properly defined, bundles allow customers to solve their problems easily, without wasting their time looking for different applications and reading reviews.
5 benefits of bundling for SaaS marketplaces
Bundling is not only great for customers: it is great for SaaS marketplace owners too. Let’s see why
1- Increase profit
At the end of the day, marketplace owners need to make profits. Bundles can drive consumer surplus, which occurs occurs when the consumer is willing to pay more for a given product than the current market price.
The aggregated demand of your users and the enhanced value of the bundle will bring in a larger net income.
Also, with bundles you can distribute products that are difficult to monetize. If you add them to a bundle with other products, then it will all become easier.
2- Reduce marketing costs
Bundling can help you to reduce marketing costs because you do not have to market each product individually. This means that you can reach a bigger audience with less investments.
This is great especially for products with a low price point or that are very vertical. Selling them together with other applications will reduce your efforts.
3- Simplify user experience
In the SaaS business, customers do not buy bundles because they can help them to save money. They choose bundles because consumption is easier.
Users love bundles that can help them to solve a problem, especially if the products are already selected for their target. For example, you could create a bundle with the most useful tools for communication agencies. Or a bundle to increase productivity in SMEs.
Your customers will not have to look for different products, read every single page and review and then make different purchases. They find the answer to their needs, pay and start using the applications. Quick and easy.
4- Boost value
A single application has much less value than a suite of services. The right selection of bundles is extremely valuable for users and this will reflect on your marketplace. They will know that your marketplace offers the best selection of products to solve their problems.
Your satisfied customers will tell about your marketplace to their colleagues, helping you to reach a broader audience.
5- Attract new vendors
Typically, SaaS marketplaces sell applications of both small and bigger players. Bundling can help to increase the sales of applications of small software vendors.
Users may hesitate to purchase an application that they do not know or that is from a vendor they have never heard about. However, if the application if combined with other products in a valuable bundle, they might overlook their doubts.
As a marketplace owner, you will help small vendors to increase their sales and this will attract them to join your network. The more your marketplace grows, the more you will attract big vendors too.
How you can use bundles in the Cloudesire marketplace
The Cloudesire marketplace allows marketplace owners to create bundles of products in a few steps. Watch this video to understand how.