What’s the Optimal Price? Infosurv Research Can Help!
Pricing a product or service is a critical part of new product introduction as well as ongoing brand management. However, getting to the right price can often be complicated by your strategies, your competition, your relationship with potential consumers, and the nature of your product category or industry itself. In spite of these complexities, Infosurv Research has many great research tools to help you determine the “right price” and maximum profitability.
Some of the research tools are available for conducting pricing research include:
- Van Westendorp Price Model – If you are at a point where you don’t know what effective price to charge for a product or service, this pricing model can help. Developed by Peter Van Westendorp, this is a four-question series that asks respondents at what price the product offering would be too cheap, cheap, expensive, or too expensive. The analysis reveals the range of acceptable prices that consumers perceive for that product.
- Newton, Miller and Smith’s Extension to Van Westendorp – Following the Van Westendorp series of questions with purchase likelihood for the respondent-identified “cheap” and “expensive” prices allows you to build a purchase likelihood model.
- Price Sensitivity Testing – If you already know a range of prices for your product and want to see where the point of inflection exists (where demand starts to drop off), there are two alternative testing methods
- Monadic Price Testing – Identify several different acceptable price points, and test the purchase intent of each of these price points by presenting only one price point to each respondent. The analysis then compares purchase intent across the different groups of respondents.
- Sequential Monadic Testing – If you can’t use monadic price testing due to sample or budget limitations, consider asking respondents their purchase likelihood at a range of prices. Start with the highest price in the range. If a respondent is extremely likely to purchase at this high price, then they will not need to be asked likelihood to purchase at a lower price (we assume that if they are likely to buy at a high price, that they would be equally or more likely to buy at a lower price). Continue to “step down” in prices until the respondent is extremely likely to buy at a certain price or until you reach the lowest price in the range. The analysis provides a modified demand curve for that product or service within a particular customer target segment.
- Value Maps – Charting respondents perceived quality against perceived cost can identify which brands are likely to win or lose in the market.
- Conjoint Analysis – If you include price as one of the attribute levels in a conjoint analysis, you can create simulation models that can predict sales movement with changing market conditions.
- Elasticity Models – Actual purchase or sales information can create a model to predict market behavior when prices change.
Pricing is too important to leave to chance. Let Infosurv Research help you get the information you need to set the right price.