Item pricing is an important and a major focus of market research. The idea is to establish what consumers are willing to pay for any product. There are four essential strategies specialists use to establish this ideal price, and they are Van Westendorp Price Sensitivity Monitor, Conjoint analysis, Gabor-Granger technique and Brand-Price Trade-off.
What consumers will pay isn’t the main consideration in pricing strategy. The type market you are in and the cost of production of the items are likewise important considerations in establishing optimum prices. Some products like computers and cars lose value almost the minute they are made. Furthermore, you won’t prefer to charge $20.00 for something that costs you $30.00 to produce. Market models and price models are a part of pricing research that are used to estimate prime demand points and the reactions of rivals in your market. Every one of these things should be considered when choosing what pricing strategy to use.
The Gabor-Granger strategy, otherwise called the immediate pricing, is a survey-based system. In this pricing strategy, customers are asked whether they would buy a specific item at a particular cost. From the result of this survey, the ideal price for each person can be set up and after that the best average price can be estimated from all the responses you get from all the customers. This technique gives you a very quick answer. Then again, it may not be accurate because people may not give an honest answer about the amount they would pay for the item.
The van Westendorp Price Sensitivity Monitor is likewise survey-based but, it makes more inquiries that are more specifically aimed. Instead of just one question, as the Gabor-Granger method, this technique asked three different questions.
- At what price would you start questioning the quality of the product?
- At what price is it a bargain?
- At what price is the product too costly to think about purchasing it?
While it may not appear like a major difference- one question versus three – the three question of the van Westendorp approach provides more information, making it easier to establish prices for a particular item. That additional information would then be used to address variety in competitors’ prices and also variation in customer responses.
Regardless of which particular strategy that you choose to use, there is adequate information you can use to establish the best success for your service or item.