Five benefits of reviewing your product packaging

A review of product packaging by your product marketing team can provide the following key benefits:

1. A better understanding of usage to create value-added unbundling opportunities. For example, you may discover that while you offer capabilities A, B, and C in a SKU, only a small percentage of your customers use capability C. And the ones who use it find it very valuable. Would you be better off unbundling capability C and offering it as an add-on SKU?
2. Identifying SKUs with high hidden costs. For example, you offer X, Y, and Z capabilities in a single SKU. Less than half of the customers use capability Z, but you discover significant costs in delivering that capability. Result – your actual margins for the overall SKU are significantly lower than what you have in your financial model today. During such a discovery, some clients were surprised they lost money on a high-volume SKU. Unbundling capability Z and selling it as an add-on SKU can help you recover some of the delivery costs and increase margins on the overall SKU category.
3. Simplify your SKU lineup. A packaging review can also help you identify certain bundles and product tiers that are either unused or expensive to deliver. You may also reduce the number of tiers where it makes sense. These will simplify your SKU lineup.
4. Understand value better. As you look at your products’ packaging, you may be surprised to find that you offer capabilities D, E, and F in an SKU. In contrast, your competitors don’t offer all the bells and whistles you offer for capability F. This feature is very attractive to a certain segment of your customer base. Now, you can use this understanding to revamp your value proposition and messaging for that SKU and specifically target that segment of customers.
5. Simplify the quotation process and increase ARR. By reducing multiple tiers and simplifying your SKU lineup, you can speed up the quotation process—especially for your new sales reps. This also allows your reps to quote add-on products and increase the deal ARR.

Best of all, you don’t need to hire expensive pricing consulting firms that use complex mathematical models and lots of buzzwordy analysis to help you simplify your packaging. Such recommendations are hiding in plain sight for your product marketing team to discover.