How often do you use PowerPoint? Mac users, how often do you use Keynote? Very few of you will respond with “all the time”. For most of us, the extent of our use with this software was limited to once or twice, or something over the course of college.

So why do you have it on your computer? It came with it right? Or perhaps you needed Microsoft Word or Excel, and PowerPoint just came with it?

Did you know you could just buy Word or Excel? You can go right to the Microsoft site and download it. The cost is just a mere $230 or so. That’s just for one, not both. Buying both would set you back double. But, you can get Word, Excel, and PowerPoint for just $150. Why are they so expensive alone, but so cheap together? Bundling.

I may be dating myself here, but I used to buy CDs. They were these plastic discs that played music. But everytime I bought one (all of the 8 I purchased) it was only for one or two songs. Why did I have to pay $1 per song for 15 songs when all I wanted was the couple I liked? Bundling.

Business bundle packages to get us to pay more crap we don’t want, just to get the stuff that we do. Sometimes the customers bite back and we get our way, thanks to Napster, and then iTunes, we can now get only the songs we want from an album. But for the most part we’re doomed to deal with bundled packages for the rest of eternity.

Bundling is designed to make us feel like we’re getting a good deal though. Microsoft Office can be had for as little as $150, an enormous discount over the retail price of the pieces of software alone. McDonalds gives you a discount for buying a #1 instead of buying the burger, fries, and drink separately. Why do they do that? Why not just sell you everything at the listed prices on the menu? Because if they do that you’re less likely to get the drink and fries on top of the burger if it isn’t bundled. The justification being it’s better to have a profit margin of 5% and $1 million in profit than a profit margin of 10% and only $500k in profit.

Sometimes bundling is used to jack up the cost of something you really want. For example, back when the Nintendo Wii first came out there were lots of shortages. The $250 system was difficult to find (trust me). But there was no shortage of Wii bundles for $450 that had games you didn’t want and accessories you didn’t need. Though it represented a value over buying each item retail, you never would have bought all those items.

But other times bundling is offered simply because it’s cheaper for the company to offer the products together. Imagine ordering a custom T-Shirt. You are charged $25 for one shirt. But if you buy 10 it’s $23, and 100 shirts are $20. This is because it’s literally cheaper (per shirt) to make 100 at a time than just one due to the setup costs for the machine.

So bundling may not be all bad. But man, $230 for Word? Come on Microsoft?

Got any bundles you love or hate? Leave them in the comments.

Photo: happymealy

By The Weakonomist

The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics.

categories: business, economics, personal finance