Question

What are the sources of profits from mixed bundling?

Answer 1

Let us understand the concept of mixed bundling from a very common example , Value Meals . In food chains like McDonald's , KFC etc , there is always a value meal option which allows a customer to combine products like a burger , fries and soda into a complete meal . This bundle is usually priced below the sum of the individual product prices . So mixed bundling is a practice of selling products either individually or in a bundle .

Now mixed bundling can be more profitable than pur bundling . Sometimes customers have a high reservation price for one product and does not wish to buy another product at all . Such customers always go for buying individual products and not in any kind of bundling , which raises profits . Now another case is when reservation prices are different for different products but customer goes for mixed bundling to get at lower price , this forces customer to buy even a product present in the bundle which could have been avoided . Thus increasing sales and profit .