Editor’s note: Rasto Ivanic is co-founder and CEO of GroupSolver, a San Diego, Calif.-based market research tech company. Balbina De La Garza, marketing manager, Emma Kearns, marketing coordinator, and Sarah Parker, marketing coordinator, GroupSolver, also contributed to the article.
A variety of external factors influence pricing decisions, and a well-executed pricing survey is uniquely suited to exploring those associated with customers’ purchase decisions. These decision-related factors include what features they perceive as valuable and what they are willing to pay for them; the price premium they place on the product brand; and more.
While there are many approaches to pricing research, we present five ways to acquire this information, starting with a simple baseline approach that provides directional pricing information and ending with a comprehensive pricing method that can help not only optimize pricing, but it can reliably estimate impact on market shares and product line profitability. Choosing which approach to deploy depends on the stage of the development cycle the product is at, the speed and precision of information we seek, and of course the budget.
Early in the development process, it may be enough to initially ask customers a simple question to name the price they are willing to pay for the product or services. It is asked in a free text format that allows respondents to enter the price they would be willing to pay. This is the fastest and easiest way to establish a starting price.
If consumers are familiar with the product or service category, their answers to this question can provide a general idea of what prices may work in the marketplace. But there are limitations. This feedback will not take into account competitor products and other market factors, nor will it help product manager understand how the product drives consumer’s willingness to pay.
With a pricin...