Customers who buy guitar strings almost certainly have guitars. Those who buy floor mats for cars will almost certainly have a vehicle. The list goes on: coffee makers and your favorite dark roast beans, printers and ink cartridges, movie tickets and concessions. These are all examples of complementary goods, which are bought and used together.
Let’s take a deeper dive into what complementary goods are, how the price of these goods or services influences each other, and how your business can take advantage of this concept to encourage more sales.
What are complementary goods?
Complementary goods are products or services often purchased and used together. Usually, there is a primary product or service—say, a cellphone, and a less expensive secondary product, like a phone case or screen guard. So you could buy a phone and not a phone case, but not vice versa. These secondary complementary products and services are offshoots of a market for a primary product or service. When the demand for a primary good increases, the demand for its complementary goods tends to increase as well.
Economists call this the cross-elasticity of demand (XED). XED measures how the change in the price of one good affects the demand for other goods. For complementary goods, the XED is negative. In other words, if the price of one good increases, the demand for its complements may decrease. Conversely, if the price of a product decreases, there could be greater demand for its complementary goods.
Imagine, for example, that the price of tennis rackets spikes due to manufacturing tariffs. It stands to reason that not only will demand for tennis rackets decrease, so will the sale for tennis balls. That’s because there’s joint demand for these two products—newcomers picking up the sport need both.
Strong and weak cross-elasticity
There are two types of complementary goods: those with strong or weak cross-elasticity. For both, the consumption of a primary good impacts the consumption of complementary goods. However, strong complementary goods exhibit more negative cross-elasticity than weak complementary goods.
1. Strong complements
These are goods that are almost always consumed together, which means that a price change in one will have a substantial impact on the demand for the other. Strong complements have a highly negative XED—meaning that when the price of one drops, the demand for its complement rises sharply.
For example, if the price of gaming consoles (e.g., PlayStation, Xbox) significantly decreases, the demand and sales for video games designed for that console will likely surge dramatically, as the lower entry cost makes the entire gaming experience more accessible.
2. Weak complements
These are goods that are often consumed together but can also be used independently. Weak complements also pop up when there are readily available substitutes for the complementary product. These items also have a less negative XED, indicating that while a price change in one product may influence demand for the other, the effect is smaller and more muted due to alternative uses or substitutes.
For instance, if the price of coffee increases, the demand for milk or sugar might slightly decrease, but many people still drink coffee black or use artificial sweeteners or plant-based milk. Furthermore, there are many uses for milk and sugar beyond putting them in coffee.
5 examples of complementary goods
- Cars and fuel
- Razors and razor blades
- Coffee and coffee filters
- Record players and records
- Hair salons and additional services
No matter what goods or services you offer, there’s almost certainly a way for you to sell multiple offerings that complement each other. Let’s take a closer look at some more complementary goods examples to help you start thinking about where your own business might identify pairable products.
1. Cars and fuel
For many people, owning a car is non-negotiable. However, the price of gasoline may influence what type of car a person buys. Historical trends show that when fuel prices increase, the demand for larger, less fuel-efficient cars may decrease, leading to a shift toward more fuel-efficient or electric vehicles.
Conversely, a decrease in fuel prices can stimulate the market for larger vehicles because lower fuel costs make operating larger, less efficient cars more affordable and reduce the financial incentive to prioritize fuel economy.
2. Razors and razor blades
Sales of handheld safety razors will steepen the demand curve for disposable razor blades. Once consumers buy a razor handle, they’re essentially locked into purchasing compatible blades—creating a built-in, ongoing need for the accessory product.
For this reason, many razor manufacturers use a business model where they sell a base unit (the razor) cheaply, then generate ongoing sales with necessary accessories (the blades). By creating proprietary shapes, razor brands can ensure that customers use their products rather than substitute goods from a competitor.
3. Coffee and coffee filters
Coffee and coffee filters offer one example of a weak complementary relationship. It’s true that a price change in coffee might impact the market for coffee filters. However, there are many ways to drink coffee, and a lot of them don’t involve filters (e.g., espresso, French press, coffee pods). So if the price of one bag of coffee goes up, consumers may purchase fewer boxes of coffee filters. But if the price of coffee filters rises, customers may choose to pivot to other methods of brewing their coffee.
4. Record players and records
The demand for records and record players can rise and fall based on the price of these complementary goods. A cheap record player can ease the cost of entry for consumers, who may snap up more records to play on their new devices. On the flip side, if the price of vinyl gets too high, consumers may see less value in owning a turntable. There are plenty of other examples in physical media, like a DVD player and individual DVDs. This also applies to digital media: if the price of Kindle books decreases, Amazon might see increased demand for Kindle tablets.
5. Hair salons and additional services
Services can also be complementary to one another. Think of a hair salon as an example. Customers visit for a primary service, typically a haircut or perhaps a hair dye. Complementary services might include deep conditioning, facial hair grooming, or a blowout. These are perfect complements for a haircut, and can enhance the look of the cut or dye, so customers may feel inclined to spend a little extra.
Strategies for selling complementary goods
- Offer complementary goods at checkout
- Create bundles
- Leverage Shopify Collective
- Price primary products modestly
- Add in accessories
Selling complementary goods can help you boost average order value and drive repeat sales. Here are some key strategies for doing so:
Offer complementary goods at checkout
Encourage shoppers to purchase related products as they finalize their order by offering add-ons during the checkout process. This strategy works well for lower-cost complementary goods like cables for electronics or cleaning kits for shoes. You may find that the quantity demanded will fluctuate based on how much you charge for primary products.
Shopify apps like Frequently Bought Together or ReConvert can automatically recommend items based on cart content. These tools can automate the process, allowing you to direct your focus toward other aspects of your online store.
Create bundles
Offer bundles that group complementary goods or services into a single purchase—such as shampoo and conditioner sets, or a deal for interior and exterior car detailing. Bundling creates value by simplifying the buying process and often encourages customers to spend more while perceiving they’re getting a better deal.
For example, instead of selling a coffee machine, offer a Coffee Lover’s Starter Kit bundle that includes the machine, plus relevant items like a bag of specialty coffee beans, a coffee grinder, and a set of mugs. This makes the purchase more attractive than buying each item separately.
Leverage Shopify Collective
Shopify Collective allows merchants to collaborate with other brands to expand their product offering with complementary goods they don’t make themselves. For example, if you sell high-end outdoor apparel, you could partner with a Collective merchant who sells specialized camping gear or hiking boots.
Your Collective partner is responsible for handling their inventory and fulfillment directly while also benefitting financially from the arrangement. For your part, you get to offer a broader range of complementary products to your customers, increasing order value and customer satisfaction.
Price primary products modestly
One option is to price your primary product with only modest markups to entice initial purchase, knowing you can make a profit on the recurring sales of its higher-margin complementary goods. These types of primary products are “loss leaders” because they deliberately generate little to no profit (or even a loss) in order to “lead” customers into buying additional items that are far more profitable.
This technique is a popular way to sell disposable products like ink cartridges, coffee pods, and razor blades. Businesses reap far greater profits from these products—often sold via subscriptions—than they do from the primary products that run on them.
Add in accessories
Alternatively, you can sell high-ticket items and add in accessories at comparatively attractive prices. For example, you can sell an expensive desk and add in relatively affordable workstation gear like keyboard trays, filing cabinets, and desk lamps, or sell luxury bags plus leather care kits. These complementary products enhance the customer’s main purchase and have the potential to boost customer satisfaction, while also growing lifetime value.
Complementary goods examples FAQ
What are complementary goods with examples?
Complementary goods are products often purchased and used together because they enhance each other’s value. Classic examples include printers and ink cartridges or gaming consoles and video games, where the demand for one often increases when the price of a complementary good decreases.
What are the rules for complementary goods?
The fundamental rule for complementary goods is that they exhibit a negative cross-elasticity of demand (XED). This means that if the price of one good increases, the demand for its complementary good will decrease. Conversely, if the price of one good decreases, the quantity demanded of its complementary good will increase.
Why is it important to sell complementary goods?
Selling complementary goods is important because it potentially increases your customer’s average order value. The practice can also help bring in repeat customers—they buy the printer once and return for years for cartridges. Selling complementary goods offers customers a comprehensive shopping experience, and the business enjoys more revenue and profitability.
What is the practice of placing complementary goods together?
The practice of placing complementary goods together is called product bundling or cross-merchandising. It’s a strategy used to boost sales by encouraging customers to purchase related items together, sometimes for less than they would spend to buy each one individually.
