How To Conduct Pricing Research In 8 Steps?

Based on the type of research methodology, there are two approaches that can be described as follows:

The direct approach: 

This approach involves providing the participants in the research with a description of the product, its features, advantages, and the problems it will solve for the customers. 

Based on this description, in addition to their own buying experience, the participants quote a price that they would be willing to pay for the product so described. 

The benefit of such an approach is the fact that it does not limit the respondent’s answers to a set of pre-defined and structured options. The open-ended nature of the questioning allows the respondent to express themselves freely by elaborating on the reasons for their choice. 

Given that efforts are put in to avoid sampling bias by increasing sample size and choosing the right participants, this technique can help a great deal in narrowing down the price range.

A lot also depends on the description of the product that is provided. The researcher needs to be up to date regarding any data that can support the respondents in making their decision. 

The indirect approach: 

While the direct approach assumes the participant’s interest in buying the product, the indirect approach uses a combination of product description and price to ask if the participant will be interested in purchasing. This approach shifts the center of focus from price quoting to demand assessment. 

The indirect approach helps the researcher understand the level of interest that a respondent has in the product, given its features and pricing. Further, it explains customer mindset about the type of features they look for and whether or not they have a need for the type of products that the brand is offering. 

Now that we’ve understood the approaches to gathering market information on pricing, it is clear how both these approaches gather customer data.

4 Pricing research techniques

Here are four techniques to find the right pricing structure for your products or services. 

1. Gabor-Granger direct pricing technique 

This type of pricing research is also known as direct pricing, as it tries to capture an optimal price based on the respondent’s willingness to buy at different price points. 

The respondent is given a product and its description, along with different prices. Respondents are asked to answer- Would you buy this product at this particular price?

Price points are changed continuously, and respondent replies at each point are noted. Respondents may respond in a “yes, no, maybe” form or may rate their likelihood of purchasing at that price point. Price points can also be decided using uniform skips such as increasing or decreasing the price by $5, $10, $15, and so on, or randomizing the choices altogether.

Gabor Granger helps in deciding the upper and lower limits of individual research participants. It, however, does not consider the competitive brand pricing, which may be less than the ones estimated through this research, and so decides prices under the assumption of a monopoly market. 

2. Van Westendorp price sensitivity model