PRICING A BUNDLE OF PRODUCTS OR SERVICES - THE CASE OF NONPROFITS

The authors determine the optimal number of items to be included in a service bundle for a profit-maximizing firm that uses pure components, pure bundling, or mixed bundling strategies. When applied to Venkates h and Mahajan's (1993) data, the number of events held is shown to hav e a substantial impact on firm profits. The authors also study the pri cing strategies of a nonprofit organization that seeks to maximize usa ge subject to a nondeficit constraint. Using the same data, the author s show that compared to a profit maximizing firm, a usage-maximizing n onprofit organization (1) charges lower prices, (2) holds more events, and (3) takes fixed costs into account in setting prices. For the dis tributions considered by Venkatesh and Mahajan (1993), there is a reve rsal in the order of preferred strategies, with the pure-bundling stra tegy dominating the single ticket strategy, though mixed bundling is s till the most preferred strategy. In addition, the authors find that a ttendance is not maximized by offering the greatest possible number of events. The effects of alternative objective functions, such as surpl us maximization, and additional bundling policies (adding bundles cons isting of only some of the events scheduled) are also examined.