Business Challenges / Pricing
"Research is a process where you can spend a lot of money and come up with zero. Isurus guides me quickly through the key decisions, helps me avoid the pitfalls, and makes sure I walk away with high-value implications."
-Vice President of Marketing, Enterprise Content Management System Provider
Pricing research is typically conducted when a company has specific questions about its pricing strategy, such as:
- What price point will generate the maximum overall revenue
- Can price reductions be used to gain market share
- Does competitor pricing represent an opportunity or threat
- Will the company’s brand equity allow for premium pricing strategies
- What pricing model best fits the market (upfront, subscription, etc)
- Can pricing models overcome other pricing obstacles and challenges
Pricing research typically explores some of the following dimensions:
- The market’s preferred pricing model
- The upper and lower extremes of the acceptable price range
- Willingness to purchase at specific price points
- Perceptions of brand value
- Internal vs. external cost comparisons
- Purchase price history
Pricing research uses qualitative and quantitative approaches depending on the complexity of the product or service and where the offer is in terms of lifecycle and market adoption:
- Qualitative research (such as focus groups or in-depth interviews) is used for pricing research for new products, when the objectives are to understand how the market conceptualizes price and value, and what is appealing about a given pricing model.
- In-depth interviews, a qualitative approach, are typically the most appropriate approach for highly complex purchases and those with highly variable or custom pricing.
- Quantitative surveys are used to identify specific price points and generate price/demand elasticity curves.
- Research techniques such as structured Gabor Granger questions, the Van Westendorp Price Sensitivity Meter, conjoint, and discrete choice analysis help identify the implications of different price points.
The typical insights gained from pricing research include:
- Optimal price points and price ranges
- Demand elasticity curves
- Market simulation models
- Pricing models that reduce purchase barriers
- The financial value of brand equity