In the classic 90s cartoon Captain Planet and the Planeteers, five ordinary kids help defend Earth by using special rings to summon the super-strong and invincible Captain Planet. The kids can hold their own against the bad guys for a little while, but when they join together to summon their hero, it’s pretty much over for the villains.
While there aren’t any eco-focused superheroes with green mullets working in ecommerce (at least, not that we know of), there’s still a lesson brand commerce pros can take from Captain Planet when it comes to setting their pricing strategy—specifically a product mix pricing strategy. This strategy combines the unique strengths of each product in your catalog to create a more powerful force to generate greater revenue for your brand.
Perhaps your flagship product has accessories you could bundle. Or you have product variants of different qualities. Optional add-ons. Consumable products customers need in order to use another product. Whatever your product mix, there are pricing strategies you can use to increase cart totals, capture more market share, and introduce consumers to more of your catalog.
In this article, we’ll explain what a product mix pricing strategy is and explore the main ways brands implement it.
What is a product mix pricing strategy?
A product mix pricing strategy is the tactic of pricing products so that each plays a specific role within the broader product mix. Let’s break that definition down a little further by its key terms.
A product line is a selection of similar products from a brand or manufacturer that fit into a coherent category. Many brands offer multiple product lines. For example, a few of Apple’s many product lines include iPhones, iPads, Mac computers, and wearables.
A product mix is the collection of all of the product lines owned by a brand, as well as all the products contained within each product line. Product mixes are generally considered to have four main dimensions:
- Width is the number of different product lines offered.
- Depth is the number of product variations in any one of those product lines.
- Length is the number of products included in the overall product mix.
- Consistency refers to the way different product lines relate to each other.
With this framework in mind, we can take a look at a few specific ways brands can strategically price the offerings in their product mix to increase sales across the board.
Types of product mix pricing strategies
There are many ways a brand can arrange its product lines to create a strategic pricing plan. But to give you an idea of how it’s frequently done, let’s examine five of the most common types of product mix pricing strategies.
Product line pricing
Product line pricing uses different price points to differentiate the various products within a product line. It’s a way of elevating higher-end products to premium status, designating the lower end as economy offerings, and/or providing a range of options to meet the specific needs and price points of a wide variety of customers. For example, within Samsung’s Galaxy line of phones, they price the S Series as their flagship phones while offering the A Series as a more affordable alternative.
Product bundle pricing
Product bundle pricing is when brands combine several products or services to sell together, usually at a reduced price. It encourages customers to purchase more from the same brand than they otherwise may have, and it offers them the opportunity to discover what else the brand has to offer, frequently from different product lines.
Product bundling is a common strategy across a wide variety of industries, as most products have the potential to be bundled with something else. For example, smartphones may be bundled with headphones, shampoo may be bundled with conditioner, different food items may be bundled together as a “combo,” and channels may be bundled together for a television package.
Optional product pricing
Optional product pricing adds an additional price for options customers can add to a base purchase. Brands must carefully consider which features to include with a product by default and which ones to offer as an upgrade. For example, air conditioning, power steering, and even seat belts used to be optional features customers could add to the purchase of a new car. Those features have become pretty standard today, but customers can still usually pay for additional options like an upgraded entertainment system, enhanced interior comforts, or sportier wheels.
Captive product pricing
Captive product pricing is similar to optional pricing in that it adds an additional product to a base product; however, with captive product pricing, the additional product is required in order to properly use the base product. Captive products are usually consumables, and the base product may sometimes include a limited quantity of them, but customers will have to come back to purchase more once they run out. For example, most inkjet printers rely on proprietary ink cartridges which customers must purchase for the continued use of their printers.
Byproduct pricing
Byproduct pricing is a way for manufacturers to gain additional profits by selling the byproducts that are created during the production of another product. It only works in limited cases, but sometimes brands end up with sellable byproducts that would otherwise be thrown away. Putting them up for sale not only makes business sense, but it also helps reduce waste. For example, molasses is a byproduct created by the processing of sugar cane. And during the COVID-19 pandemic, some alcohol distilleries used byproduct to create hand sanitizer.
Should you use a product mix pricing strategy?
Whether your brand should use a product mix pricing strategy depends on the width, depth, and length of your product mix. If you’re narrowly focused on a single product and have no byproducts, then your product mix may not be extensive enough to use these kinds of strategies.
But if you do offer multiple products, and especially if you have several distinct product lines, then you’ll almost certainly want to think strategically about how your different products can work together. The question isn’t whether you should use a product mix pricing strategy, but which type of strategy you should use and how you want to implement it.
Monitor your prices with Prowl
No matter what pricing strategy you use, it’s important to have and enforce a MAP policy to make sure sellers and retailers stick to the prices you prescribe.
Prowl is the most advanced MAP monitoring software available. It crawls every site your SKUs appear on, comparing prices to your pricing policies. When it detects a pricing policy violation, it takes a screenshot of the violation and notifies you. You can also build and customize templated MAP violation messages to streamline MAP enforcement.
Since Prowl crawls everywhere your products appear, it can track both authorized and unauthorized sellers, helping you find new sellers you’d like to partner with or those you need to eliminate.
MAP enforcement is impossible without price monitoring. And price monitoring is impossible at scale without tools like Prowl.
Want to see how Prowl helps protect your revenue?
