If you’ve ever booked a flight online, you know the rush of spotting a bargain—a ticket to your dream destination at an unbelievable price. You hit Book Now, feeling like you’ve scored a win. Then you start customizing: Choosing your own seat for $25 feels worth it, and checking a bag for $40 adds convenience. You end up paying a bit more than that original price, but you’ve tailored your purchase to fit your needs.
This experience, common in the airline industry, is a widely used pricing strategy known as optional product pricing. The approach helps businesses increase revenue, expand customer choice, and stand out in a competitive market.
Let’s explore how the optional product pricing model works, how it differs from other strategies, and how to apply it effectively.
What is optional product pricing?
Optional product pricing is a pricing strategy in which a business sets a relatively low price for its core product but charges extra for optional products, add-ons, or additional features.
The goal is to attract customers with an appealing entry-level price for the basic product while giving them opportunities to purchase optional upgrades. The foundational product is fully functional on its own, but optional enhancements add more value and improve the overall experience. This balance of accessibility and customization allows businesses to cater to specific customer preferences and needs and increase average revenue per sale.
Optional product pricing example
To see optional feature pricing in action, take the premium ecommerce brand Leatherology, known for its personalized leather goods. The company blends high-quality core products with compelling, optional upgrades.
Leatherology’s unique selling proposition is creating timeless leather products that customers can make their own. Take the Sloan backpack, for example: Customers can personalize it by adding a monogram with up to three initials. Font and color choices come with clearly identified additional fees. For instance, adding a simple three-initial monogram in Sans Serif font costs an additional $35, while a handcrafted vintage font featuring both text and shadow colors runs $120.
This approach shows how optional product pricing can elevate a premium product. By offering personalization as an upgrade, Leatherology empowers customers to create one-of-a-kind pieces while significantly boosting the average value of each order.
Benefits of optional product pricing
Think of optional product pricing as anà la carte menu for your product. The main course has a set price, but customers can pay extra for premium sides, toppings, or sauces. When implemented effectively, this approach can:
- Boost revenue. Those small additional purchases add up. While the core product might have a modest profit margin, high-margin add-ons can drastically increase your average order value and overall profitability. You can generate additional revenue from customers who are willing to pay more for a premium product.
- Increase customer satisfaction. Not everyone needs or wants every feature you offer. By giving customers the choice to select only the optional features they want, you’re creating a more personalized experience. This could lead to higher customer satisfaction and brand loyalty.
- Broaden market appeal. A lower price for the basic product makes your brand accessible to a wider audience, including budget-conscious shoppers. This can lead to a higher sales volume of the core product. Meanwhile, the premium features and optional upgrades still appeal to customers with a higher willingness to pay, allowing you to capture value from multiple market segments.
- Provide valuable customer data. Tracking which extra features are the most popular gives you direct insight into customer demand. This data can inform future marketing campaigns, product development, and your overall growth plan.
Optional product pricing vs. captive product pricing
It’s easy to confuse optional product pricing with a similar-sounding strategy: captive product pricing. Although they both involve a primary product and secondary purchases, that’s where the similarity ends.
Captive product pricing (or captive pricing) involves a core product that requires complementary products from the same company to function. The essential product is often sold at a cheaper price—sometimes even as a loss leader (a product sold at little or no profit to attract customers)—to lock the customer into the company’s ecosystem. Profit then comes from the recurring sale of the “captive” accessory products. In short, optional products are truly optional and simply enhance a standalone item, while captive products are necessary for the original purchase to work.
The most famous example is printers and ink cartridges. You can buy a printer for a very low price, but it’s useless without the manufacturer’s often expensive ink. Other common examples include razors and their proprietary blade cartridges, and video game consoles and their licensed games.
When choosing between these two pricing models, consider whether you want to encourage customization or ensure repeat purchases.
Best practices for optional product pricing
Implementing an optional pricing strategy doesn’t have to be complex. Here are three best practices:
Anchor with a fair core product price
The success of this model relies on the appeal of your foundational product. Its price should be attractive enough to draw customers in and get them to consider the purchase—your proverbial “foot in the door.” If the low price point of your core product feels like a great deal, customers will be more psychologically open to adding extras.
However, it must also represent fair market value. The product shouldn’t feel stripped down or incomplete without the add-ons. A solid, standalone product makes the optional features feel like true enhancements, not necessary fixes for a subpar item.
Ensure add-ons provide perceptible value
Your optional upgrades must feel like they are worth the extra cost. Customers are savvy; they can spot a cash grab. Each add-on should offer a tangible benefit. For ecommerce companies, this could be an upgrade to a more durable or luxurious material, extended warranties, personalization (like an engraving or monogram), or a bundle of useful accessories.
The goal is to increase the total package’s perceived value. When your customer feels an optional feature will improve their experience, the higher price feels justified, not exploitative.
Create a transparent selection process
Avoid surprising your customers with hidden fees at the final checkout step. Optional products should be displayed clearly on the product page. Here’s how to do that:
- Be clear. Use high-quality images and straightforward descriptions, and explicitly state the additional fee for each optional product.
- Be intuitive. Use checkboxes, drop-down menus, or visual customizers that make it easy and even fun for customers to view how their choices change the price in real time.
- Avoid pressure. The language you use should invite customers to consider options, not pressure them. Frame it as “Customize your order” or “Make it yours” rather than a hard upsell.
These steps allow you to implement an optional product pricing model that boosts your bottom line and encourages stronger customer relationships. A good user experience is important for turning a potential sale into a larger, more profitable one.
Optional product pricing FAQ
What are captive product pricing and optional product pricing?
Both are pricing strategies involving a main product and secondary products. The key difference is necessity. With optional product pricing, the secondary items (add-ons, extra features) are true options that can enhance a fully functional core product. With captive product pricing, the secondary items (like ink for a printer) are essential for the core product to work.
What is an example of optional pricing?
Optional pricing comes into play when you purchase a new car. The base model has a set price and includes all the essential features. You then have the choice to pay extra for optional upgrades like a sunroof, a premium sound system, or heated seats. Other examples include budget airlines charging for selecting your seats and checking your bags, or mobile games that are free to play but offer in-app purchases.
How do you implement optional product pricing?
Identify a core product that delivers great value on its own at a competitive price. Then, analyze customer demand and consider what extra features or accessory products they are asking for. Think about offering personalization, premium materials, subscription services, or extended warranties. Price your add-ons according to their perceived value and cost, and update your website’s product pages to make selecting options easy, visual, and transparent.
