A Brief Overview: Pricing Research!


Competition between businesses to determine prices for their goods or services is referred to as pricing competition. It is a typical occurrence in most marketplaces and can significantly affect a company’s profitability. Companies compete on price to get a greater market share by charging less than their rivals. This tactic, nevertheless, might not always be effective in the long term because it might result in decreased profitability and market saturation.Businesses must maximize market research and plan their price strategy to compete effectively in the market. Successful pricing strategies not only aid businesses in increasing their market share but also foster consumer loyalty and brand value. Businesses must thus continuously evaluate the market and modify their pricing strategy as necessary to be competitive and successful.

What Is Pricing Research?

Companies employ pricing research, also known as market research price analysis, as a sort of market research to determine what their customers are willing to pay (WTP) for certain goods. It helps to decide the best one from the many types of pricing in marketing. Several sectors maximize market research in their company plans to be competitive in the market. Technology, retail, healthcare, finance, hospitality, and transportation are some of these sectors.

Types of Pricing Research Methods

There are four types of pricing research methods which include the following:

1. Van Westendorp

A sort of direct pricing research technique is the Van Westendorp price sensitivity meter. Instead of receiving one perfect price, you instead receive a variety of “acceptable” pricing.

How it functions: Customers are given a product and the following inquiries:

  • What price would you consider too high to contemplate for the product? 
  • At what point would you start to doubt the product’s quality and stop considering it because you believe the price is too low? 
  • At What point would you believe the product is becoming pricey, but you could still be interested in buying it? 
  • What price would you consider the product to be a fantastic deal and a bargain?

Benefits: With this straightforward research technique, you may arrive at a range of prices that consumers will accept rather than a single price point.

Cons: Results may be a little erratic because respondents don’t see and use the product in its whole on-shelf environment before responding.

2.Conjoint Analysis

Conjoint analysis, which makes use of discrete choice analysis, is regarded as one of the most trustworthy methods for determining price.

How it functions: Discrete choice modeling and conjoint analysis are compatible. Respondents are asked to choose or rate a collection of items that are shown to them. This is done repeatedly, with each round showing a different set of product characteristics, including the price, which forms the basis of pricing services.

Benefits: evaluates the worth of particular product characteristics and takes into account more aspects than just price.

Cons: The drawback is that it doesn’t account for any changes in decision-making caused by advertising or rivals.

3. Monadic Testing

Monadic testing is the best option if you wish to assess price sensitivity. Sequential monadic design, paired-comparison design, and proto-monadic design are a few variants. 

How it functions: Respondents are given a full range of goods to choose from, just as in a store. A price is given. They are asked to select the item that best suits their requirements.

Benefits: Because everyone only sees one product-price combination, monadic testing reduces prejudice. 

Cons: The technique is static and does not account for how rivals’ pricing changes could affect consumers’ decisions.

4. Gabor-Granger

A form of direct pricing known as the Gabor-Granger approach involves asking respondents if they would buy a good or service at a particular price. The price is then altered, and respondents are once more asked if they would buy the good or service.

How it functions: To find an ideal price point within the market, this direct pricing approach first uses the data to evaluate demand at specific projected price points. 

Benefits: It can offer insightful information on consumer behavior and preferences, enabling firms to adjust their pricing strategy appropriately. 

Cons: It depends on customers making accurate predictions about their purchase habits, which do not necessarily correspond to actual buying trends. The method also does not take into account other elements that could influence buying choices, such as product quality or rival price. 

What Is the Necessity for a Pricing Research?

Discussed below are some of the importance of pricing research and why it is needed for businesses:

Competitive advantage: By offering insights into rivals’ pricing tactics, pricing research helps business firms to remain competitive in the market and modify their pricing as necessary.

Improved profitability: Pricing research assists companies in achieving the business objective of maximizing profits and growing revenue by identifying the best price point for a good or service.

Increased customer happiness: Businesses may modify their pricing strategies to match customer requirements and boost satisfaction by understanding consumer preferences and behavior via price research which helps in achieving the objective of a business firm presented by customer satisfaction.

Product development: Price research can provide information on customer demand and willingness to pay for particular features or advantages, which can help with product development. It helps to achieve the business objective related to the market share of the company.

Achieve social objective: Pricing research also helps to achieve the social objectives of the business and lets the business decide the optimum price while still being socially responsible.

Understanding customer behavior: Price research aids businesses in better understanding of consumer preferences and behavior, such as how much they are willing to pay for a good or service, which enables them to set prices that are fair and represent market demand.

Deciding the best pricing points for a product or service: Price research aids businesses in identifying the best price point for their goods or services, optimizing earnings, and raising sales.

Introducing new products: Price research may benefit firms by guiding their pricing strategy and lowering the risk of unsuccessful product launches.


So, what is the primary objective of a business? Profit. Right? Pricing research is one of the most important tasks to do to sell a product and earn profit. Pricing research allows you to decide the price that the customer is ready to pay while still being in profit. So, if you want customers to buy your product, then you need to maximize market research for the product. To learn more about how pricing research works and how you can determine the optimum price for products, enroll in the PG Certificate Program in Product Management from UNext to develop a deep understanding of the whole process.  



Related Articles

Please wait while your application is being created.
Request Callback