Bundle Up for Savings—But Be Careful

As temperatures fall outside, it becomes time to bundle up and save some money. No, I'm not just talking about wearing a sweater around the house so that you can set your thermostat a couple of degrees cooler (although I highly recommend that, too).

Rather, I'm talking about the marketing practice called "bundling." The Web site InvestorWords.com defines "bundling" as "The practice of joining related products together for the purpose of selling them as a single unit. ... Bundling arrangements usually feature a special pricing arrangement, which make it cheaper to buy the products and services as a bundle than separately."

That sounds simple—and good—particularly since InvestorWords.com mentioned my favorite word: "cheaper." In many cases, buying bundled products and services really can be a good value.

For example, bundling your insurance policies, such as homeowner's, automobile, and other coverage, into a package policy with a single insurance company can often lower your total premiums by 10 percent or more. Bundling is also popular and often cost-effective in the telecom industry, where you might get a discount by buying phone, TV, and Internet service from a single provider.

There are also some good values to be had on bundled consumer products, particularly if you're in the market for a home computer or other consumer electronics.

But be careful when you consider buying specially priced bundles of products and services; they're not always the best deal. Here's what to watch out for:

• Always compare à la carte pricing. Just because something is billed as a "specially priced" package deal doesn't mean that the package price is lower than the individual components would be if you bought them separately. Always check the current prices of the individual products and services included in the bundle, including any sale or promotional discounts that may apply.
• Do you really need it? Oftentimes bundles include things you're not really in the market for, but at such a nominal additional cost, who can resist? Ask yourself if you really want or need such add-ons, no matter how little they increase the total price.
• Beware of introductory offers and short-term contracts. Particularly when buying bundled services like telecom plans, make sure that what you're buying isn't just a specially priced, introductory offer or a short-term contract for service—one designed to increase dramatically in cost once the introductory period expires.
• Does it require you to spend more in the long run? A number of charities and other groups have started selling bundles of coupons and other discount offers to raise funds. Frequently, many or all of the special offers contained in the bundle require you to spend additional money down the road (e.g., $10 off a restaurant meal costing $25 or more). In cases like that, if what you really want to do is support the charity, you might be better off just writing them a check and foregoing the "money saving" bundle.
• Read the fine print. As with any purchase, let the buyer beware. Always read the fine print before signing a contract for bundled services, such as telecom services.

Again, bundled products and services are frequently a true value, so don't ignore them. On the other hand, bundling up in a sweater and turning down your thermostat is a lead-pipe cinch when it comes to saving money this winter.


Jeff Yeager is the author of the book, "The Ultimate Cheapskate's Road Map to True Riches." His Web site is www.UltimateCheapskate.com.