Avoid the Price-Cut Trap

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Bundling products together can help move regularly priced products when sales go soft - especially when the marketfor the product is weak to begin with.

That's what Chuck Sussman found when he was running Pretty Neat Industries, in Pompano Beach, Fla., and sales of hiscosmetics organizer began to fall off. He didn't want to cut prices, because that probably wouldn't have generated enough newsales to make up for the loss in profitability per sales unit.

"I had already been planning to introduce a new version of the organizer at about half the regular price," recalls Sussman."Instead, I priced the cheaper model at about 90%, shrink-wrapped the old and new products into one package, and stuck on aDay-Glo banner that said 'Free $4 Value with This Purchase!"

Not only were Sussman's margins higher on the combination pack than they would have been if he'd sold the productsseparately, but the package sold like crazy. "Customers kept the expensive product and gave the inexpensive one as a gift,"Sussman says. "And, of course, we wound up increasing our margins, not cutting them, which is what would have happened ifwe'd cut prices."

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