| Determine what the
Market will Pay What is Price
Sensitivity Testing?
Why Test Pricing Scenarios?
Is Price Sensitivity Testing Right for
You?
Case Study
What is Price
Sensitivity Testing?
Price sensitivity testing is term for a variety of research methodologies used to
help identify specific price points potential customers would be willing to pay for a
particular product or service. The methods used are quantitative in nature allowing
for projections to be made about the likelihood of a product's success. This
information, combined with forecasting tools, can provide powerful insight into what a
company is facing as it evaluates various pricing options.
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Why Test Pricing Scenarios?
Ø
Maximize your revenue
potential – Setting
a price too high, or too low, can cost a company money in lost customers or lost revenue.
Ø
Determine if you can deliver
at the right price – Having
a good product isn't always enough. Delivering that product or service at the right
price is the key.
Ø
Project
revenue – Using
normative data, you will be able to project how much of the market will buy at different
price points.
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Is
Price Sensitivity Testing Right for You?
Price Sensitivity Testing is used by organizations that are working with unknown
pricing situations, new products, products that offer thin margins or products that offer
improved benefits to established products.
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Case Study
A small manufacturing and distributing company recognized the potential to develop an
off-shoot of their most popular product. With significantly higher product
development and manufacturing costs, Management wanted to be sure the product would
succeed while identifying a price that would be accepted in the market. Through a
series of tests with potential users, the product was determined to be very likely to
succeed at the second of four price points. We also provided Management with a model
for projecting future sales for the product. Today the product is one of our
client's most successful products.
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