Let’s face it: we love bundle deals, whether a combo meal at a restaurant or movie theater or a Black Friday media console with accessories thrown in. Marketers know it, too, which is why bundle deals are very common in every aspect of consumerism (there are bundles for services like Internet, cable and cell service, or even insurance). While bundles make us feel like we’re getting a special value (as sometimes they are), they can also be money pitfalls that lead us to spend more money than we intend on things we neither need nor want.
One of the key reasons we love bundles besides feeling like it’s a better value is the convenience. Standing in line at a fast food restaurant, staring at the menu board and trying to make a fast decision about which separate items we want and wondering what the total will be, we spot the bundled “value deal” with its clear price and the shortcut immediately gives us mental relief.
Bundles save us from this ambiguity effect – a cognitive bias in which our ability to make a decision is hindered by a lack of information (in this case, how much money each separate item costs and what they total). A “one and done” decision is mentally easier for us, so we gravitate towards it.
Marketers exploit this tendency to get us to buy items we wouldn’t otherwise. For instance, some studies show that fast-food customers are more likely to purchase fries if they’re available in a meal bundle than if they’re only available a-la-carte. By bundling, retailers and marketers can increase their sales, clear out slow-moving inventory, or boost a poor seller.
David’s Note: Speaking of fries, I always skip the fries when I go to In-n-Out, a burger chain that simply adds the price of a medium size drink, fries and the burger into the meal price with no discount. On more than one occasion, the cashier would give me a slightly funny look just because I didn’t want fries nor the sugary drink and wanted to eat in. I really just want the burger and skip the others mainly for health reasons, but it’s another obstacle for people trying to break away from the norm. My reward is a fatter wallet and slimmer gut though, so I can’t complain too much.
Do Bundles Save You Money?
Now that we know why we fall for them, let’s look at whether they represent the value they claim. The answer is: not usually. If there is a discount, it’s usually less than 5% (not that you shouldn’t consider a small savings worthwhile – remember the dollars to doughnuts analogy?).
In most cases, you’re paying just as much for items that are bundled as you’d pay for them individually. Retailers can get away with this because they know we’ll automatically think we’re getting a better deal and won’t usually bother to do the math.
The Real Value of Bundles is Convenience
As I mentioned earlier, we like bundles because of their convenience. We’re often willing to pay a little extra for convenience because convenience is time, time is money, and the pursuit of the things we want to be doing is more important to us than a few extra cents or dollars.
The important thing is understanding that this is the real value of bundles – not saving money.
Be Wary of Bundles That Cost You More in Money and Clutter
If you’re not taking advantage of a bundle for its convenience, consider whether you’d still buy each of the bundled items separately. Is there something in the bundle you don’t need or want, but figure is just part of the deal? The reality is that you’re paying (probably full price) for something you don’t need or even want. In many cases, it’s better to skip the bundle and purchase only the items you need.
Not only will you save money and improve your frugality by taking a double look at bundles; in the case of consumables, you’ll save yourself extra calories or wasted resources. In the case of merchandise, you’ll save the need to transport everything back home just to clutter up your home.
Bundles are fun and convenient, but they only represent savings some of the time. If you’re up for that, at least understand the tradeoff. More importantly, be wary of falling for bundles under the guise of getting a good deal. If it’s costing you more than you’d be spending otherwise, surprise the marketers by passing on their conveniently-packaged “value.”
Like this article? Check out the other parts of the money trap series below:
- Part #1: Outsmarting the Anchor-Price Comparison Trap
- Part #2: Comparing Dollars to Doughnuts
- Part #3: The Sunk Cost Fallacy
- Part #4: Mental Accounting
- Part #5: Be Wary of Bundles
Editor’s Note: Did you know about the service called $5 meal plans? For $5 a month, they send you recipes of delicious, healthy, yet cheap food that costs just $5 a meal.
Several of my friends signed up and they are able to eat at home more because the instructions are easy to follow, making everything convenient. The deal also comes with grocery shopping lists, which saves them so much time. Check it out yourself by clicking here and you too may be able to save more and become healthier at the same time.