Abstract
The optimal number of items to be included in a service bundle for a profit-maximizing firm that uses pure components, pure bundling, or mixed bundling strategies is determined. When applied to Venkatesh and Mahajan's (1993) data, the number of events held is shown to have a substantial impact on firm profits. The pricing strategies of a nonprofit organization that seeks to maximize usage subject to a nondeficit constraint is also studied. Using the same data, it is shown that, compared to a profit maximizing firm, a usage-maximizing nonprofit organization 1. charges lower prices, 2. holds more events, and 3. takes fixed costs into account in setting prices. For the distributions considered by Venkatesh and Mahajan (1993), there is a reversal in the order of preferred strategies, with the pure-bundling still the most preferred strategy.