Price sensitivity analysis

The research helps to resolve the pricing issue simply and quickly. This is important for new products that have no analogues on the market. Through research, you can understand how consumers evaluate the value of a product. In the case of a truly in-demand product, the excess of perceived value over cost can reach 1000%.

The issue of pricing is very important: on the one hand, the goal of any company is to make a profit, because the higher the price, the higher the revenue and profit. On the other hand, an excessively high price can scare away the consumer and thereby affect the decline in performance. It is important to find the optimal price that will allow you to get the best possible result. This is especially important when the product is introduced to the market and there are no established prices on the market.

The minimum size of a representative sample for such projects per region is 400 questionnaires. By region we mean any territory for which separate analytics is required (this could be, for example, a city or a country as a whole). In cases where it is necessary to separately consider and compare data from, for example, 2 cities, the minimum sample is 800 questionnaires. The minimum period for such a survey is 1 business day.

The cost of a project to draw up a portrait of the target audience consists of the cost of collecting a selected number of questionnaires (payment is taken only for fully completed questionnaires) and the cost of analytics (usually no more than 10-15% of the cost of data collection)

You can calculate the cost of one questionnaire yourself using our calculator (you will need to enter the number of open and closed questions in the questionnaire, quotas)

The cost of such a study is from 2000 £ (the cost is indicated for a minimum sample).

Marketing research conducted using the Van Westendorp method (Denmark) can determine the optimal price for a product or service. Its essence is to obtain answers from the target audience to four questions:

1. At what price would you consider the product too expensive and refuse to purchase it? (too expensive)
2. At what price would you consider the product price too low and you would have to refuse the purchase due to unacceptable quality? (too cheap)
3. At what price does a product begin to become expensive enough to make you think twice about purchasing it? (expensive)
4. At what price does a product begin to become cheap so that you begin to doubt the quality and think about the purchase carefully? (cheap)

Based on the responses received, four curves are constructed: price values are plotted along the horizontal axis, and the accumulated number of respondents is plotted along the vertical axis. The so-called “indifference point” (or IPP, Indifference Price Point), when the price is perceived as not too high, not too low, that is, normal - the point is determined by the intersection of the “expensive” and “cheap” curves. The optimal price point (OPP, Optimum Price Point) is located at the intersection of the “too expensive” and “too cheap” curves. The limits of product price fluctuations are determined by the lower and upper points: respectively, by the intersection of the “too cheap” and “expensive” curves with the “too expensive” and “cheap” curves. In practice, it is recommended to set the optimal price (OPP) for products.

BCGroup's work on determining price sensitivity works like this:

• 1. An NDA (confidentiality agreement) is signed between BCGroup and the company;
  2. A BCGroup specialist clarifies the reasons that necessitated such a study and understands the current situation;
  3. A BCGroup specialist agrees with the customer on the final version of the survey questionnaire;
  4. BCGroup specialists conduct the survey in a short time (it is possible to survey up to 5,000 people per day);
  5. Next, the BCGroup employee transfers the data array to the customer’s representative in Excel or SPSS format;
  6. After 7-10 days, a BCGroup employee sends an analytical report to the customer based on the results of assessing the audience’s sensitivity to price (sample reports)