Use survey research to set the price for your new product and keep it competitive over time.
How should you assess pricing?
There are a few techniques survey researchers have developed to gauge price ranges from consumers.
A rating scale can be used to segment your respondents according to how price-conscious they are. Those who are more driven by other factors, such as the features or availability of a product can then be considered separately from those whose primary concern is budget.
Rating scales can also be used to gauge the acceptability of a price point, or to find out which price-points would be considered for purchase (for example, a very high price point may cause someone to ignore a product completely as it is so far out of reach.)
Direct pricing measures
This approach asks respondents to rate the likelihood of purchase at a range of different price points. It allows researchers to define a window of price options between an upper and lower tolerance level.
Van Westendorp pricing model
This method widens the scope to include psychological factors, asking respondents to report at what point:
The price makes them question the product’s quality (where it’s so cheap it seems too good to be true)
The price is inexpensive but not cheap enough to question product quality
It is expensive, but not so much that they wouldn’t consider it
It’s so expensive that they wouldn’t even consider it
For this method to work well, it’s important to start off with a very wide range of prices, far above and below what you would actually consider realistic.
Conjoint analysis is a popular technique that uses a simple choice mechanism to gather information-rich answers from your respondents.
A conjoint survey question will include a range of options, each with a set of attributes. The attributes are weighted differently with each option, so that the respondent needs to weigh up the pros and cons and make a trade-off.
The respondent’s choice reveals how important certain attributes are relative to each other, and how preferences change when attributes are combined in a product.
This is just the start
If you’re planning a pricing study, get in touch to find out what other methods and analyses we can support.