Classroom Companion: Business

6.7 
 Bundling
Product or service bundling means that several products or services are combined 
and offered for sale as a single package. One example is the Microsoft Office 365 
package. This package contains the digital services Word, Excel, PowerPoint, 
OneNote, Outlook, Publisher, and Access. Another example is cable television sub-
scriptions where the user may subscribe to various bundles of television channels. 
The cable television provider may also extend the package to include audio broad-
6.7 · Bundling

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casting, streaming of movies and music, broadband Internet access over Wi-Fi, 
and VoIP. This is exemplified in 
.
Fig. 
6.6
.
Pure bundling means that consumers can only buy the bundled package with-
out the opportunity to buy the single products or services in the package. Mixed 
bundling means that a consumer has the option to buy the package as well as the 
single products or services constituting the package. In general, the price of the 
bundle is lower than the sum of the price of the individual services constituting 
the package.
Bundling is a strategy for providers to increase sales. In the digital economy, 
bundling is common and particularly efficient because of the zero marginal cost 
property—it does not cost the provider anything adding another service it already 
owns to the package. The consumer may find this business model attractive since 
an additional service in the bundle contributes to increased value for the consumer 
and, hence, an increased willingness to pay for the bundle.
The digital economy has also enabled the unbundling of previously bundled 
goods and services. Unbundling has become common in the music industry. Apple 
iTunes, for example, unbundles CD albums offering each music track as an inde-
pendent product. The customer may then buy a single track rather than buying a 
complete album. It also allows the consumer to build their own personal playing 
lists containing songs from several albums. The benefit for the music industry is 
that this increases sales without generating additional costs since the marginal cost 
of providing a complete album or just a single track is zero in both cases.