Lending Club Blog

Comparing Components of Package Deals

In nearly every case, buying a package deal from a service provider is less expensive than purchasing each of the included services separately. Even so, you might be overpaying in one of two ways: getting more than you want or paying more than an alternative.

A “Quarter Pounder with Cheese Extra Value Meal” at McDonald’s costs less than the total cost of the burger, fries, and drink. But if you aren’t thirsty, the meal costs more than you would spend on just the burger and fries. You might also be equally satisfied with a Whopper Meal from Burger King that may cost less.

While the burger and fries is a simple example to put package deals into perspective, we are constantly offered “deals” at higher dollar amounts, as well. The cable companies are happy to offer you TV, Internet, and phone service for a considerable savings over the sum of each of those services priced individually. But if you’d rather get free over-the-air HD programming or if you compare the bundled cost of phone service not with the cable companies’ prices but with a discount provider like Vonage or Skype, the package deal could end up costing you more.

I noticed this exact problem when I was scheduling my sprinkler system servicing. In my area, anyone who uses city water must choose from a short list of licensed providers to have their sprinkler systems tested on a yearly basis. I have typically used one company that packages the testing with the pre-freeze fall turn-off and post-thaw spring turn-on. Since I’m selling my home before the fall, I didn’t want to pay for that portion of the package. Removing one of the three services from the package price only reduced the cost by 20%, but would still lower my expense. What’s more, when comparing prices, I found another licensed provider who charged 35% less.

Grouping together items you were going to purchase anyway may get you a substantial discount, but if you are getting more than you need or could save even more money by purchasing portions of the service bundle separately, then a package deal is a bad idea. Our local phone company has started an ad campaign against the cable company with the tag line “Don’t Get Bundled.” Though they clearly have a vested interest in keeping potential customers away from their competition, their advice may be useful if you fall into the situation described above.

Have package deals ended up costing you more?

Saturday, April 25th, 2009 at 6:39 am

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