What Is Optional Product Pricing and How to Use it Successfully

TL;DR

Optional product pricing works best when:

You have a scalable or consumable accessory ecosystem.
The base product attracts users and the optional items generate the real profit.
You can incentivize customers to upgrade or customize their experience.

Make sure to structure the strategy clearly, test add-on uptake, and continually iterate based on real user behaviour.

Optional product pricing often employs the concept of a loss leader. Loss leaders are products that are sold below market value in order to encourage consumers to buy more products in the long term.

As a classic example, gaming consoles are often sold at a loss. Over the years following the initial purchase, gamers need to buy games at a mark-up, which is where the real profit comes from.

Gaming companies and other manufacturers of physical goods are typical adopters of the loss leader strategy, but they are far from the only ones. Optional product pricing is also regularly employed by many SaaS enterprises today.

In this article, I will go over the optional product pricing strategy, illustrate its pros and cons, and provide you with some real-world examples of this strategy in use.

By the way, Baremetrics can help you measure the effect of a new pricing strategy in a few clicks. Sign up for a free trial or check out our demo to map the effects of pricing changes without disrupting your users.

What is optional product pricing?

Optional product pricing is a common pricing strategy among businesses that have one main required product, accompanied by many “optional products”. “Optional’’ is in inverted commas because, as we’ll see in some use cases below, oftentimes these aren’t exactly optional at all.

In order to maximize total revenue, some companies choose to charge separately for each product. The main product is usually priced low or even at a loss (hence the name, ‘loss leader’) to encourage buyers to purchase the main product over its competitors.

Once they’ve bought into the system, customers may soon find that they need to buy further services or accessories to get the most value out of the product. Companies can charge more for these add-ons because the user is already locked into using the core product.

This system is founded on a concept known as sunk cost. Essentially, most users choose the cheapest available option for the initial purchase, failing to take into account the long-term costs of necessary accessories.

Bundle pricing and when to use it instead

The opposite of optional product pricing is bundle pricing. In bundle pricing, individual features and accessories are sold altogether for an aggregate price.

As a company offering a service, bundle pricing is the better option when the accessories are not needed in order to get good value from the core product. Bundling add-ons into the main price allows users to trial tools they may not have used otherwise, and ensures that your development costs for additional features are covered.

Somewhat ironically, optional product pricing is best adopted when the product’s accessories are in fact not optional at all.

What are the two components of optional product pricing?

For optional product pricing to work for you, you need a minimum of two products: the primary product, and at least one complementary feature.

Furthermore, these components should possess certain traits for optional product pricing to succeed. Let’s take a look at them.

The primary product

The primary product should be the most expensive component. Its features should be the main selling point of the overall service. It should also be somewhat incomplete without the other products, without deceiving its users about its functionality.

In this instance, incomplete can mean anything from a gaming console without games, to a fully functional but limited platform that requires plugins or apps to extract the most value from its use.

While the former is overtly incomplete and unusable by itself (you need games for your Nintendo), the latter isn’t (while WordPress is perfectly usable without plugins, most users will eventually accumulate quite a few).

It’s critical that in neither case the user feels that they’ve been lied to about the need for complementary products, and the focus remains on the excellent value they’ve received for the core product.

The complementary product

The most successful cases of optional products fall under two categories:

numerous complementary products are available for use in conjunction with the core product, instead of just one or two add-ons (e.g. you can buy many games for your PlayStation)
the complementary good is a consumable (all those annoying ink cartridges for your printer)

With this strategy, you can sell enough optional products to compensate for the lower price of the main product.

What are some examples of optional product pricing?

Optional product pricing can be found in many industries. Here are some of the most common examples.

1. Gaming systems and games

While every new gaming console seems incredibly expensive, its price is usually much lower than the internal components are actually worth. That’s because Microsoft, Nintendo, and Sony all want you to get hooked on their gaming ecosystem, and spend more money on games or memberships over the next five years. This could be labelled the Razor and Blades business model where the razor (physical game console) is the low cost primary product that drives demand for the high cost (subscription services and downloadable content).

2. Mobile games and in-app purchases

Taking the case above to its extreme, freemium gaming has become a cash cow for many game companies. Similar to the above, the main game costs nothing, but before you know it, you’ll have spent $99.99 on crystals, energy potions, and better armor.

3. Phones and plans

Apple has broken the mould with the high price of iPhones today, but most telecom companies still offer extreme discounts on their phone hardware to get users to sign two-year contracts for their network services.

4. Plane tickets and checked bags

While plane tickets are not cheap, discount airlines have slashed their prices by making you pay extra for everything—added leg room, checked bags, use of the overhead compartment, drinks, food, priority boarding, seat choice, and whatever else they can think of.

This allows discount airlines to appear much cheaper than the main carriers while possibly charging more in the end. Southwest Airlines made headlines recently when they made the move to charge passengers for checked baggage. For over 50yrs they had allowed passengers two free bags, a significant point of difference for them in the market however a move towards standard fare structure changed this.

5. Printers and ink

Until work from home took off due to the pandemic, I thought owning a printer and buying ink cartridges every three months was finally a thing of the past. But that does not seem to be the case anymore, so let’s add that to the list.

6. SaaS platforms and apps

Slack, Shopify, WordPress, and so many other beloved SaaS platforms have opened up to third-party developers.

Offering a SaaS platform for much less than the fair market value—or even for free—has become a great way to attract a huge user base. Those same users can then be offered costly plugins to improve their experience.

In doing so, the service owner can boost revenue through complementary services. If additional plug-ins or cross-platform compatibility solutions aren’t part of the initial revenue percentage agreement between the owner and investors, these types of incidental services can actually become far more lucrative than the core product for the developer, as they might be raking in up to 100% of this part of the profits.

What are the pros and cons of optional product pricing?

All pricing strategies have strengths and weaknesses. To decide whether optional product pricing is the right strategy for your business, consider how you expect users to interact with your product and its features.

What are the advantages of optional product pricing?

If you are in a highly competitive market, you might not be able to charge enough for your software to earn profit directly.

In that case, optional product pricing can be a great way to get customers in the door. Once they are hooked on your platform, you are free to charge a bit more for all the extras that provide them with added value.

What are the disadvantages of optional product pricing?

Optional product pricing really only works when the optional products aren’t all that optional in reality. It also works best when you have a lot of optional products.

If customers decide they don’t need or want the optional products, then you might find yourself priced at a loss and burning money fast.

Summary

Many SaaS businesses find themselves choosing between bundle pricing and optional product pricing. The right choice comes down to what your customers require from your services.

Try to figure out whether your users can live without your add-ons. You can do this through user surveys, or feature experiments among new users (avoid disrupting your existing user base as much as possible!). If your users need several of the additional features you offer, consider adopting an optional product pricing model.

If you want to take a look at how your cohort is pricing their plans, Baremetrics offers benchmarks for many different types of metrics, including how many businesses in your field offer free plans, how their prices are presented, average subscription amounts, and much more.

Pricing Insights

Try the free trial today! You’ll get 14 days of free access to benchmarks, as well as the full range of Baremetrics’ financial tracking software.

FAQ

What is optional product pricing?

Optional product pricing is a strategy where a business charges a low or even below-cost price for a core product, then generates the real margin by selling complementary add-ons, features, or accessories alongside it. The primary product draws customers in, often by undercutting competitors, while the optional items, which are frequently not optional in practice, produce the profit. In SaaS, this shows up as a low-cost or free base platform paired with paid integrations, plugins, or usage-based modules that customers need to extract full value. The entire model depends on the concept of sunk cost: once a customer is invested in the core product, switching costs make the add-ons feel like a logical next purchase rather than an upsell.
What is the difference between optional product pricing and bundle pricing for SaaS companies?

Optional product pricing and bundle pricing are opposing strategies, and the right choice depends on how essential your add-ons actually are to your customers. With optional pricing, the core product is priced low and complementary features are sold separately, which works best when customers genuinely need those extras to get value from the platform. Bundle pricing packages everything together at an aggregate price, which is the better approach when add-ons are nice-to-have rather than necessary, because bundling covers your development costs and encourages feature discovery. For SaaS founders deciding between the two, the practical test is this: if most of your customers will eventually need several of the add-ons to achieve their core job, optional pricing typically drives higher ARPU over time. If your extras are discretionary, bundling reduces pricing friction and supports faster trial-to-paid conversion.
What companies use optional product pricing, and what do they have in common?

Companies that use optional product pricing successfully tend to share two traits: a scalable ecosystem of complementary products, and a captive market that makes switching away from the core product costly once the customer is invested. Classic optional pricing examples include gaming console makers who price hardware below cost and profit from games and subscriptions, airlines that offer low base fares but charge separately for baggage and seat selection, and printer manufacturers whose real margin sits in ink cartridges. In SaaS, platforms like Slack and Shopify follow the same logic by offering a low-cost or freemium base layer and monetising through third-party apps and integrations. The common thread is that the optional products are, in practice, captive product pricing in action: the add-ons are not truly optional once the customer depends on the core platform.
How does optional product pricing differ from captive product pricing?

Optional product pricing and captive product pricing describe related but distinct strategies that are often confused. Optional product pricing is the broader approach: a low-priced primary product is paired with separately sold complementary items, which may or may not be strictly necessary. Captive product pricing, also called captive pricing, is the more specific version where the complementary product is genuinely required for the primary product to function, creating a captive market with very little choice. A printer that only accepts proprietary ink cartridges is a captive pricing example because the customer has no alternative. A SaaS platform that charges separately for optional integrations is closer to optional pricing, unless those integrations become so embedded in daily workflows that removing them is not realistic, at which point the distinction collapses and the captive pricing definition effectively applies.
Which of the following is true of optional product pricing: the add-ons are always genuinely optional?

The most important truth about optional product pricing is that the add-ons are rarely as optional as the name implies. The model works precisely because customers underestimate their dependency on complementary products at the point of initial purchase, a behaviour driven by sunk cost reasoning. Once a buyer is committed to the core product, the friction of switching platforms makes paying for add-ons the path of least resistance. For SaaS businesses, this means the strategy is most effective when your optional modules, integrations, or usage-based features become deeply embedded in customer workflows over time. If customers can realistically ignore your add-ons and still get full value from the base product, the optional pricing model breaks down and bundle pricing is likely the stronger alternative.
How do I implement an optional pricing strategy and measure its impact on MRR?

Implementing an optional pricing strategy for a SaaS product starts with identifying which features drive the most incremental value for specific customer segments, then unbundling those features from the core plan and pricing them separately. Once live, the critical next step is tracking how add-on uptake affects key revenue metrics: watch expansion MRR to see whether existing customers are buying into the optional layer, and monitor average revenue per account to gauge whether the strategy is lifting overall monetisation. Running cohort analysis helps you compare the LTV of customers who adopt add-ons against those who do not, which tells you whether the optional products are creating stickier, higher-value relationships. Baremetrics surfaces expansion MRR, ARPA, and cohort-level LTV directly from your Stripe or Recurly data, so you can see the revenue impact of your optional pricing model in real time without rebuilding your reporting from scratch.
How can I benchmark my optional pricing model against other SaaS companies to see if my add-on pricing is competitive?

Benchmarking your optional pricing model against comparable SaaS businesses requires data on how peers structure their plans, what they charge for add-ons, and how their average subscription values compare to yours. Anecdotal competitor research only gets you so far because most companies do not publish their add-on revenue or ARPA figures publicly. Baremetrics publishes open benchmark data aggregated from hundreds of subscription businesses, covering metrics like average plan pricing, the proportion of companies offering free tiers, and typical MRR ranges by business stage. Using that data alongside your own expansion MRR trends and churn rate by plan tier gives you a grounded view of whether your optional features are priced to convert, or whether you are leaving revenue on the table by underpricing the add-ons that your customers already depend on.

What Is Optional Product Pricing and How to Use it Successfully

Table of Contents

What is optional product pricing?

Bundle pricing and when to use it instead