Faculty of Economics and Business Administration Publications Database

The Benefits of Bundling Strategies

Olderog, Torsten
Volume: 52
Number: 1
Pages: 137 - 159
Month: April
ISSN-Print: 1439-2917
ISSN-Online: 2194-072X
Year: 2000
Abstract: This paper analyzes the effects of three bundling strategies – unbundling, mixed bundling, and pure bundling – on profit and sales, using a simulation study based on a model by Schmalensee (1984). The analysis shows under what conditions which strategy is the most profitable, how large the profit and sales differentials are for each strategy, and what characteristics the corresponding price structures have. Based on our results, we explain the differences observed in the study and derive a set of implications for practical price structuring.