How to use the bundle pricing margin calculator
- List each product in the bundle with the price it sells for alone and your cost for it. Use Add an item for more products, up to twelve.
- Enter the bundle price the customer would pay for all of them together.
- Optionally open Advanced options and enter a margin you want, to see the lowest bundle price that reaches it.
- Read the margin on the bundle, the profit compared with selling the items separately, the discount you give, and how many more bundles you would have to sell to earn the same profit. Use Copy, Print or CSV to share it.
Formula
Margin = (price - cost) / price
Discount = items sold separately - bundle price
Extra bundle sales to match profit = profit separately / profit per bundle - 1
Lowest price for a target margin = total cost / (1 - target margin)
Margin here is a share of the selling price, not of cost. The extra sales figure assumes each bundle replaces one full set of items that would otherwise be sold separately.
Two items bundled at a discount
Item A sells for $30 and costs $12. Item B sells for $20 and costs $8. Sold separately the pair brings in $50, costs $20 and earns $30, a margin of 60%. Bundled at $44 the pair earns $24, a margin of 54.55%. The customer saves $6, which is 12% of the separate price.
The bundle earns $6 less per set, so selling 125 bundles earns the same $3,000 as selling 100 sets separately. That is 25% more bundle sales. To keep a 60% margin the bundle would need to sell for $50, which is no discount at all.
Why a bundle margin is lower than the item margins
A discount comes straight out of profit, because your costs stay the same. A 12% discount on a 60% margin does not give a 48% margin. It gives 54.55%, since the price shrinks and the cost does not. The deeper the discount, the faster margin falls, and a bundle priced at or under cost loses money on every sale.
A bundle can still be a good decision. It may raise the number of items each customer buys, clear slow stock, or save you shipping and handling. Those effects are not in the arithmetic here, so use the extra sales figure as a test: if you doubt you can win that much extra volume, the discount is probably too deep.
Using the result
Try several bundle prices and compare the margin and the extra sales needed. To understand what a single discount does to profit across a catalog, use the discount profit impact calculator. For the basics of margin and markup, see the profit margin calculator and the markup calculator.
Costs should include everything that changes with each sale, such as materials, packaging, payment fees and shipping you pay. Leaving costs out makes every margin look better than it is.
Assumptions and limits
- Every price and cost is the number you type. Nothing is looked up or assumed.
- The customer would otherwise buy all the items at their separate prices. Customers who would have bought only one item are not modeled.
- Costs are per unit and do not change with volume. Taxes and fees on the sale are not included unless you add them to cost.
- Margin is profit divided by price. Markup, which divides profit by cost, is a different figure.
Frequently asked questions
What is a good margin for a bundle?
There is no single answer. The right level depends on your costs, your other products and how much extra volume the bundle brings. Compare the bundle margin with your separate margin and with the extra sales you would need.
How do I find the lowest price I can charge?
Enter the margin you want under Advanced options. The tool divides your total cost by one minus that margin, so a 60% margin on $20 of cost needs a price of $50.
Why does the tool say I need extra bundle sales?
Because a discount lowers profit per sale. If each bundle earns less than the items sold apart, you must sell more bundles to earn the same total, and the percent shown is how many more.
Can I bundle products with different costs?
Yes. Each product has its own price and cost, and the tool adds them up. The table shows the margin of every item so you can see which ones carry the bundle.