What is Pricing Research?

Pricing research is a research method that aims to discover customers’

willingness to pay for a product or a service. The goal of pricing research is
to measure the impact of change in prices on the demand of any offering as
well as to determine the optimal price for new products. With customer
insights, organizations can optimize customer response to the new price and
discover the psychological effects of price points on sales (demand).

Solutions for Offerings that Pricing Research Provides:

 New Product Pricing Insights
 Developing a Subscription Pricing Model
 Product Portfolio Pricing Optimization
 Menu Bundling & Optimization
 Pricing Configurable Products & Services
 Competitive Pricing Response
 Promotion Effectiveness

So, whether a company is planning to increase prices or pricing a new

product, research is the key to effective pricing strategy and informed
business decisions.

What Challenges Can Pricing Research

Address?
 Executing Price Increases Optimally

 SKU specific or portfolio wide

Launching New Products at the Right Price

 Portfolio optimization / cannibalization

 Competitive value position
 Achieving the Right Pricing Architecture

 Portfolio optimization / cannibalization

 Competitive value position

Understanding Product Value & Customer’s Willingness to Pay

 Economic value & perceived value

How to Conduct Pricing Research?

So clearly, pricing research can go a long way in helping companies discover
and create new business opportunities. But how to make sure pricing
research is conducted correctly? The following are the “Five Cardinal
Rules of Pricing Research.”

1. Define the Research Purpose

 Understand the who, what, why, where, when and how behind your
customers’ pricing decisions.
 Focus on capturing the following elements of the buying process into
the research design: , frequency of purchase, key decision maker, and
length of the buying process.

2. Know Your Tools

 Not all tools are created equally: no two methods are exactly alike and
no one method can be used all the time
 The key is to match the data collection method to the pricing problem
for which you are seeking input.

3. Understand How Your Customers Perceive Price

 Understanding how your customers view price in the context of their
purchase is critical to effective pricing research design.
 Example: when the price is high, the customer’s reaction can be
different: “sticker shock” or prestigious image?

4. Use Research to Sell – Not Just Set Price – Support

Your Sales Team
 Take time to nurture your sales representatives and offer them full
communication of the pricing research to help support any adjustments
to pricing strategy.

5. Use Segmentation to Select – and Reject – Potential

Customers
 Price segmentation is often used to identify which group of customers
is the “best” to serve
 Many companies can’t resist the temptation to sell their product or
service to the whole market, in a misguided attempt to grab volume.
 Consequently, these organizations get dragged down by serving the
unprofitable “cherry pickers” at the expense of their profitable “core
customers.”