Examining Price Point
Often understanding price point is done simply by launching a product and seeing what customers will pay for it. The price at which the product sells is the price it should be listed at. But that’s a method that involves a lot of waiting and as we know, time, in business, means money.
To quickly get to the heart of the right price to sell your item at, there are a few ways you can survey consumers to give you a solid guide on what to run with. Three of the main methods include; asking your respondents verbatim what they would pay and why, offering fixed ranges for the respondents to select from and comparing your product to competitor products to see where they sit.
Question types include:
- Unprompted Verbatim
- Prompted Fixed Range
- Prompted Competitor Price
Simply asking a respondent how much they’d be willing to pay for an item or product can be quite effective. You’ll get all sorts of replies in a wild range but after reviewing the responses you’ll find a range within which your product should sit. But your questions should not stop there, there’s more value to be had.
Asking respondents why they would spend a particular amount is a good start, but extending that into questions like how much they’ve spent in the past, what they have spent on competitor products and how often they would expect to spend that much money can provide significant extra value.
NB: an ‘open’ question in AnswerCrowd can contain more than one of the below questions.
Example Questions (After explaining what the product is, potentially with an image or two)
- How much would you be willing to pay for this product?
- How much do you think is a reasonable price for this product?
- Why do you feel that way?
- What makes you feel that way about the price you’ve chosen?
- How much do you spend when you purchase [INSERT COMPETITOR PRODUCT]?
- How often would you likely buy the product?
- What might be your monthly budget for the product?
Prompted Fixed Range
Providing respondents with a simple set of price ranges for them to choose from is an easy way to get the pricing data that you want. It’s important to provide exclusive ranges to ensure that you don’t ‘double up’ within ranges and also to make it easy for respondents to understand which they should select.
Similarly, it’s important to be clear about the product that you’re looking to have ranged. Include things like whether it’s the single pack or a multi-pack, which size or colour it might be. All of this will effect the rating that respondents give and the vaguer your definition is, the lower the quality of the response will be.
ACME Donuts sells a range of delicious donuts to suit every taste, appetite and dietary requirement.
When thinking about ACME’s donuts, how much would you expect to pay for the ACME Chocolate glazed donut?
- Less than $1
- $1 to $1.99
- $2 to $2.99
- $3 to $3.99
- $4 to $4.99
- $5 to $5.99
- $6 to $6.99
Prompted Competitor Price
Comparing competitor product prices can be very powerful but it’s important to ensure you’re comparing like for like products otherwise you’ll end up with skewed results. For example, if you are comparing a large product with a small product, you may get skewed results as people would be willing to pay more for a larger product that has more ‘in it’.
Also the price ranges that you wish to compare must be clearly stated and easily understood. Don’t create a price range that is complicated, for example $43.75 to $58.23. Use simple and clear pricing boundaries that respondents will be able to easily comprehend and conceptualise.
Please rate each of the following products with respect to how much you’d expect to pay for them.
Where 1 means $1 and 10 means $10
Product rating options:
- ACME Donuts Chocolate Glazed Donut
- Bobs Donuts Strawberry Delight Donut
- Donut World Jam Filled Donut
- Donuts R US Cinnamon Surprise Donut
- Mary’s Donuts Choc-Chip Donut
- Donut Thime Rainbow Donut
- Dough Girls Donuts Pink Explosion Donut
- Homers Donuts Big Sprinkle Donut
Any combination of these question types can be used to extract meaningful and actionable data. If you’d like to see how much such a survey might cost and why you’d want to do it, see here.