Price Optimization & Impact
CRS is often asked by clients if their concepts or products are properly priced. This might mean that the brand is worried they are charging too much for a product or they are not charging enough and are leaving money on the table. Understanding the effect that a price increase or decrease has on product demand is critical input to pricing strategies.
There are a wide variety of different types of pricing approaches that CRS employs. They range from very sophisticated multivariate techniques to more direct lines of questioning. We do not believe in a “one size fits all” approach to pricing. Some decisions require the more sophisticated and expensive approaches, while others may simply require a less expensive, more directional approach.
Pricing research is best in a competitive context, if one exists. The more sophisticated approaches such as Choice Based Conjoint or Discrete Choice allow for brand preference selection among competitors when price is changed. The less sophisticated Direct Purchase Intent technique simply asks likelihood to buy a product as its price point changes. The third common approach is the Peter van Westendorp Price Sensitivity Meter which derives the optimal price and the price range where most sales will take place.
The data collected generally allow us to build price elasticity and demand curves. When using the higher powered trade-off techniques, we can also determine share change for the whole competitive set in light of price changes.
To facilitate learning, we build a pricing simulator to show what happens to the business as we vary prices. The simulator is very user-friendly and appropriate for non-insights professionals. CRS has had great success with helping clients better understand the implications of pricing their product.
If you would like to further discuss this approach, please let us know using the Contact Us form or call us at the office 770-246-0298.