Understanding Pricing Survey: A Comprehensive Guide

A pricing survey is like asking your customers how much they think your product is worth and how much they are willing to pay for it.

Instead of guessing what price gives you profit or just choosing a fair price, pricing surveys use factual information from your customers. This way, you can find the best price for your product or service based on what your customers are willing to pay. It works best compared to simply looking at how much other companies are charging or trying to guess the right markup.

This article explores straightforward methods for conducting a pricing survey and provides suggestions to ensure obtaining the most useful information.

Why Is Pricing Survey Important?

Pricing surveys play a crucial role in ensuring that you set the right prices for your products. Deciding on the price for your product or service is a complex task influenced by various external factors that affect whether people will choose to buy it or not.

A well-conducted pricing survey uncovers the underlying reasons behind your customers' purchasing decisions, providing you with the insights needed to optimize your pricing strategy.

Through a pricing survey, you can:

• Determine Acceptable Price Range: Understand the range of prices your customers find reasonable.
• Identify High-Value Features: Discover which product features customers are most willing to pay for.
• Evaluate Brand Value: Assess the perceived value of your brand compared to your competitors.
• Optimize Pricing Strategy: Use survey data to refine and improve your overall pricing approach.

How to Ask About Prices in a Pricing Survey?

When you are conducting a pricing survey, the way you pose questions about prices depends on what you want to find out and the information you need.

There are simple ways to ask about prices that can give you a general idea of where your product's price must be. More advanced tools can help as well with pricing analysis that can precisely show you the value of each part of your product and suggest how much more you can charge for it.

The type of pricing strategy you are using will influence the questions you ask in your survey to gather pricing information. When you are using a direct pricing strategy, your questions will focus on how much customers are willing to pay for your product. On the other hand, when you are using an indirect pricing strategy, your questions will revolve around the value of the product rather than its cost.

What are the Four Types of Pricing Survey?

Deciding the right price for a product can be tricky because customers always prefer lower prices whenever possible. To help businesses with this challenge, there are four common types of pricing survey that provide valuable insights into pricing strategies. These are:

Willingness to Pay (WIP)

Question: "How much are you willing to pay for [product name]?"

WIP, or willingness to pay, tells you the price or price range your potential customers are ready to pay for a specific product or service. In this pricing survey, you share details about the product with the respondents and then ask the WIP question. It is a clear and straightforward question that gathers precise data for easy evaluation.

Depending on your research needs:

• Use an open-ended question when customers are familiar with the product.
• Use a closed-ended question when your product is unique in the market with no similar alternatives.

While this helps you understand how much customers are willing to pay, it lacks context on how high or low you can set the price before losing customers. It is advisable to use it along with other pricing surveys for better results.

Van Westendorp Price Sensitivity Meter

A Dutch economist named Peter Van Westendorp produced a pricing survey method known as the Van Westendorp Price Sensitivity Meter. This model uses four questions to help understand how customers perceive the value of a product.

Brands use these four questions to figure out a range of prices that matter to their customers. Here are the four questions for your pricing survey:

• At what price will you think [product/service name] is so cheap that you will question its quality and not buy it?
• What price will you consider [product name] to be fair value for money?
• What price do you consider too expensive for [product name], but still buy it?
• At what price will you consider [product name] too expensive to buy?

By using the data gathered from these questions, you can find the best price points. This method helps identify the price that is seen as cheap, the one considered fair value, the one seen as a bit expensive but still acceptable, and the one considered too expensive.

The advantage of this pricing strategy is that the questions are easy to answer, and the data is simple to analyze. Plus, it gives you the flexibility to identify a range of price points, helping you decide the best price for maximum profit.

Gabor-Granger Pricing Survey Methodology

The Gabor-Granger pricing method is a helpful way to find the most acceptable price for a product by figuring out how flexible its price can be. Developed by British economists Andre Gabor and Clive Granger, this method involves asking questions about the likelihood of purchasing at different prices.

Here is how you can use this type of question:

Question: How likely are you to purchase our subscription package at $550/month?

• Extremely likely
• Very likely
• Somewhat likely
• Not so likely
• Not at all likely

To make the most of this pricing model, you need to ask the same question at various price points. Use online survey tools with skip logic functionality to ask follow-up questions based on the answers you receive.

For example, start with a price at which you want to position the product. When the respondent picks any of the bottom three responses, you can then ask the same question at a lower price. On the other hand, when the respondent selects the top two responses, you can use the top-2-box score analysis to gather valuable insights. This method helps you understand the demand and revenue curves, enabling you to determine the best price that maximizes revenue.

Conjoint Analysis

Conjoint analysis is a pricing survey method that lets you understand how customers value specific features or attributes of products or services. This method brings real-life shopping experiences into online surveys, helping you pinpoint which features matter the most in customers' purchase decisions.

The survey question in conjoint analysis presents respondents with various combinations of product features or attributes, including the price. Respondents are then asked to choose between these different combinations.

This way, you get insights into the features or attributes that customers find most attractive when making a purchase decision. Conjoint analysis is a valuable tool to understand the real preferences of your target audience.

Tips for Conducting a Pricing Survey

To make your pricing survey effective, it is crucial to have a clear plan and use the right tools and methods for gathering accurate and useful data. Here are some tips to help you run a pricing survey that yields relevant results.

• Define Your Goals

Before you start your pricing survey, clearly outline your goals. Knowing what you want to achieve will help you create appropriate questions and structure your survey to gather the information you need.

• Select the Right Audience

Ensure that the people participating in your pricing survey represent your target market. This ensures that the results accurately reflect your customer base and can be used to shape your pricing strategy.

• Utilize the Right Survey Tools

Take advantage of various online survey tools that make it easy to create and conduct pricing surveys. Options such as  QuestionPro, SurveyMonkey, Qualtrics, and Google Forms are popular choices.

• Provide Incentives

Encourage participation by offering incentives such as discounts or freebies. This motivates people to take the pricing survey and share their honest feedback.

In conclusion, pricing surveys are essential for businesses seeking to formulate informed pricing strategies for their products or services. By gathering data on customers' perceptions of product value, their willingness to pay, and the acceptable price range to remain competitive, these surveys offer insights into purchase behavior and factors influencing decisions. This understanding allows businesses to establish effective price tiers and determine optimal positioning, maximizing profitability by aligning pricing strategies with customer preferences and market dynamics.