What is the right price for our product? This is a question that comes up regularly.
For understanding consumer price perceptions in the competitive market environment qualitative research can be quite useful. With depth interviews, ethnographic observations and group discussion you can establish the reference points used by consumers to compare prices in your product category. More about the price reference points you can read here.
Quantitative methods that we most frequently recommend are: Van Westendorp Price Sensitivity, Brand vs. Price Trade-off (BPTO) and Conjoint Based Pricing.
Van Westendorp Price Sensitivity measurement is easy to use and provides clear results. This method determines the absolute price thresholds and the optimal price range.
The main value of BPTO is that it allows estimating the demand price elasticity vs. competitors’ prices. The final price configurations can be interpreted as perceived brand value.
Conjoint Based Pricing
With conjoint you take into account price in relation to product attributes and the brand. The conjoint methods require special software and are more complex to implement. The types of conjoint we would recommend are choice-based and adaptive.