Quick and Dirty Pricing Research
My go-to pricing research method for learning how much buyers are willing to pay is Van Westendorp’s Price Sensitivity Meter.?(There is a plethora of information on Wikipedia if you want to know more.)?However, it only applies when doing a pricing research project.?
But wouldn’t it be great to do some pricing research every time you interact with your market??There is one question you desperately want to ask, “how much would you pay for this?”?But you can’t.??
People won’t answer that question honestly.?Most will lowball the answer, thinking you might be trying to get them to commit right now.?Or maybe they think they can influence what price you will eventually charge.?Regardless, they are focused on themselves and how to get a better deal from you.??
The questions in Van Westendorp’s method are effective because they use misdirection.?Instead of asking how much you would pay, they ask other questions.?At what price is it too expensive to consider??At what price is it expensive but you still might consider it??Etc.??But these questions aren’t conversational. They don’t feel natural in most interactions.
Here’s my favorite question to ask when talking with my market about products or services.??“How much do you think other people like you would pay for this?”??
The respondent doesn’t know what other people think, so they can only share what they think.?But the misdirection keeps them from trying to manipulate you, at least a little.?This is a quick and easy way to get some, albeit imperfect, information on willingness to pay.?
I recommend you use this question towards the end of most of your market conversations.?I promise it will give you some interesting insights.?Let me know how it goes.??
Share your comments below.
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Solving pricing problems, sharing pricing knowledge and connecting with pricing professionals
1 年Mark, I've had luck using VW in 1:1 conversations as well. Sure, its not statistically significant and some folks have trouble with the "too low" question, but it works to facilitate a conversation about pricing - especially when you ask them to explain why they gave you the answer they did.
An experienced, outcome-focused pragmatist working with aftermarket leaders to grow revenue and profits while reducing customer churn
1 年Mark Stiving, Ph.D., I love your end-of-discussion question. To get a baseline, I ask people a satisfaction question about "Value for Money." Then your question at the end...
Executive and Board Member | Strategy, Go to Market, Pricing and Operations | Partner at River Logic
1 年I think that with a little extra effort, more robust and less biased methodologies could be used, such as: (1) most-least questions (MaxDiff: Maximum Scaling of Differences) or (2)?give customers the list of features and ask them to build their ideal product...
Marketing executive that helps companies grow by winning new customers, keeping the customers they win, and growing the customers they keep | VP Product Marketing | VP Marketing | CMO | GTM expert
1 年What I love about Van Westendorp PSM is it' simple, it's process driven, and produces results quickly without a huge research project. Glad I learned it from you! :-) It's a far better approach than "I don't know Bob, what do you think?", "Go ask Sales", or "How would you pay?"
CEO Ibbaka Performance - Leader LinkedIn Design Thinking Group - Generative Pricing
1 年Ed Arnold has been getting some very powerful results by asking people how much of the value created they would expect the vendor to claim. Seeing the distribution of answers can give insights into how the vendor is seen by its customers.