Walking down Main Street on a busy Saturday, it’s easy to see why Fredericksburg is a popular destination. From our boutique shops, restaurants, wineries and historic buildings. Fredericksburg thrives on offering unique experiences. However, our local business owners as well as visitors are dealing with the stubborn persistence of inflation. Our small/micro businesses must look for smarter ways to provide value.

A recent insightful piece from the Harvard Business Review, "It’s Time to Try Bundled Pricing," suggests that increasing revenue might not be in the individual items we sell, but in how we package them together.

The Logic of the Bundle

At its core, bundling is the strategy of selling two or more products or services together for a single price. Think of the "Value Meal" at a fast-food chain or the "All-Inclusive" package at a resort. But as HBR points out, bundling isn't just for corporate giants; it is a sophisticated tool for small businesses to capture what economists call "consumer surplus."

In Fredericksburg, we see this occasionally, but there is room to grow. There are two primary ways to approach this:

1. Pure Bundling: Items are only available as a package. (e.g., A specialized "Romantic Weekend" package that includes the room, a bottle of local sparkling wine, and a spa voucher).
2. Mixed Bundling: Items are available both individually and as a package. (e.g., A winery offering a tasting for $25, a cheese board for $20, or both together for $38). I’ve seen many around town do mixed bundling in its simplest form: buy one item at a particular price or buy two for less than double the price.

Why It Works for Our Town

The HBR article highlights that bundling works best when customers have different "willingness to pay" for different items.

Imagine a tourist visiting from Austin or Houston. They might be highly motivated to buy a designer leather jacket at a boutique but hesitant to spend $40 on a matching scarf. Meanwhile, another shopper might love the scarf but find the jacket too pricey. By offering a "Signature Look" bundle, the shop provides a perceived discount that encourages both customers to take home the set.

For our local service providers—like tour operators or B&Bs—bundling reduces the "pain of paying." When a visitor pays one price for a "Wine & History Tour" that includes transportation, lunch, and museum admission, they stop worrying about the cost of each individual component and start focusing on the experience.

Implementation for Local Owners

If you’re considering a bundle for your Fredericksburg business, start small:

• Complementary Goods: Don't just bundle your best-sellers. Pair a high-demand item with a "slow mover" to introduce customers to new products.
• The "Mixed" Approach: Research shows mixed bundling is often the most profitable. It gives the customer the feeling of choice while highlighting the "deal" found in the bundle.
• Keep it Simple: The goal is to reduce "decision fatigue." A bundle should make the buying process easier, not more confusing.

As we move through the slow winter season of tourism and local trade, let’s consider how we can package the best of what we offer. Bundling isn’t just about moving inventory; it’s about creating a higher-value experience for our neighbors and visitors alike. In Fredericksburg, the whole is often greater than the sum of its parts.