Setting Profitable Prices: A Step-by-Step Guide to Pricing Strategy--Without Hiring a Consultant by Marlene Jensen

Author:Marlene Jensen [Jensen, Marlene]
Language: eng
Format: mobi
Publisher: Wiley
Published: 2013-01-28T14:00:00+00:00

The Difference between Testing and Research

While you will see many different definitions and distinctions between these two, the easiest for me is that testing requires you to actually try to sell your product or service. Research does not require this.

The last thing you want when you’re setting a price is research giving you people’s opinions about the right price. And there’s a lot of bad pricing research out there that does just that.

You’ve probably seen research that asks “What’s the highest price you would reasonably expect to pay for X?” The answer to this research is worthless—even if it’s put into charts and a professional-looking presentation.

Here’s why pricing research that asks for opinions is worthless:

1. People don’t really know—until they’re faced with something they want to buy and a price for that something.

2. People will lie—figuring they’re doing a service to themselves and other buyers by helping keep prices low.

3. People don’t really care; they’re just trying to get through the survey so they can go do something they will enjoy instead of answering meaningless questions.

Pricing research that is choice-based conjoint, which requires the respondent to select from different combinations of product or service and price, is the best we can do in pricing research.

Price testing, however, is pure gold. No questions for people to answer. Just an offering and a price. No questions on the results, either. You add up the number of buyers at each price and your total profits—and you have a clear and (assuming you follow the instructions in the next chapter!) reliable answer.

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