Pricing Research Techniques
There are a number of different techniques which can be used to undertake pricing research, depending on the objectives and practical considerations of the project design.
Price Sensitivity Meter (PSM)
PSM is a technique used to help determine acceptable price levels against the perceived value of products or services. It is particulary useful where brand is not an issue, or where there is little knowledge of prices or competitive offerings. Hence, it is a useful technique for innovative or new products.
Gabor Granger
A simple but effective technique developed in the 1960s, but still highly applicable for exercises where the pricing research is a small element of the research objectives, or where a single product is being evaluated.
Choice Based Conjoint (CBC)
There are a number of techniques for evaluating price using conjoint analysis. CBC is one of the most recognised and used where brand is important. It has the advantage of measuring purchase intentions of whole product bundles rather than intention to buy on a specific price. The technique also allows "what if" simulations to see the effect on market share and revenue levels against competitors.