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Pricing surveys: Different types and how to use them

Quickly determine how much customers are willing to pay with pricing surveys from SurveyMonkey.

Pricing your product or service correctly is vitally important to your business. Your pricing strategy can impact everything from revenue and profits to brand perception. 

Some brands rely on looking at competing products’ pricing or use cost-plus pricing. While this may be relatively easy, you could be leaving money on the table. Pricing research helps you understand what your customers are willing to pay for your product or service. With this information, you can optimize your prices to increase sales, customer satisfaction, profits, and more.

The research data you need is collected through pricing surveys such as willingness to pay, Van Westendorp Price Sensitivity Meter, Gabor-Granger, and conjoint analysis. With proper survey research, you can pinpoint the optimal price or price range for your product based on data provided by your target customers.

A pricing survey is a research method used to determine optimal pricing for products or services. Pricing surveys ask questions directly to your target market to gain insights into how much they are willing to pay, what features have the highest impact on sales, the perceived value of your product/brand, etc.

There are several ways to conduct pricing surveys, but every type of pricing research shares a common goal—to find out how real potential customers value a product or service. 

The data from pricing studies is used to set prices for products and services. This information then can be used to make more accurate expected revenue and profit calculations. 

Pricing is a complicated process. Pricing surveys are the best way to gain insights directly from your potential customers. Here are specific reasons to perform pricing research via survey:

  • Accurate pricing is a major driver in whether a customer will make a purchase. In other words, your products’ prices can be the difference between the success or failure of your product in the market.
  • Properly conducted pricing surveys reveal what’s behind your customers’ purchase decisions.
  • Pricing surveys provide an acceptable price range and help determine the value your brand has in the marketplace.
  • With a product price that customers are willing to pay, you can maximize your revenue without softening demand.
  • The right pricing can communicate brand and product value. Price and the perception of quality are connected.
  • Pricing surveys are useful in uncovering which product features your customers view as most valuable and how different customer or market segments view your product differently.

Read on to find out how to ask pricing questions in a survey to find your product’s optimal price.

There are several types of pricing surveys. Willingness to pay, Van Westendorp Price Sensitivity Meter, Gabor-Granger, and conjoint analysis are the four most commonly-used methods. Each one provides valuable information for your pricing strategy. 

Pricing is a complex process, and you may need to choose more than one type of survey to obtain the information you need for your most accurate and effective pricing.

Also called WTP, willingness to pay surveys reveal the highest price point customers are willing to pay for your product or service. The economy, seasonal trends, market trends, location, product differentiation, product quality, and competitive value all influence willingness to pay. Technically, the three other methodologies in this article are all seeking to determine WTP.        

A simple willingness to pay survey presents product details and then asks respondents what they would be willing to pay for the product with either an open-ended question or multiple closed-ended questions with a series of price points. 

Use open-ended questions if your target audience is familiar with the product type, similar competitor products, and approximate cost. Closed-ended questions are helpful when you have a unique product and a target price. 

In your questions, provide survey respondents with multiple price ranges, placing your desired target near the middle.

Examples of willingness to pay questions:

Open-ended question:

How much would you be willing to pay for this product?

Closed-ended question:

What would you be willing to pay for this product?

  • $25-35
  • $36-45
  • $46-55
  • $56-65
  • $66-75

This method is basic and easy, but the following methods provide additional insights for informed pricing decisions. Keep reading to learn more about them. 

Dutch economist Peter Van Westendorp developed the Van Westendorp Price Sensitivity Meter in 1976. This pricing method, often used when companies aren’t sure of the price range for a product, assists in identifying a series of price points that are psychologically critical to customers. 

The survey questions in the Van Westendorp method capture your target customers’ price sensitivity, purchasing power, thought process regarding purchase decisions, and, most importantly, how much they are willing to pay for your product. The one thing Van Westendorp does not take into account is your competitors’ pricing.

The four pricing survey questions asked in the Van Westendorp Price Sensitivity Meter are:

  1. At what price do you think this product is so inexpensive that you’d question the quality and not consider buying it? (Too cheap)
  2. At what price do you think the product is a bargain—a great buy for the money? (Cheap, good value)
  3. At what price would you think the product is getting expensive, but you still might buy it? (Expensive/high side)
  4. At what price would you begin to think the product is too expensive? (Too expensive)

Once collected, you’ll need to take your survey response data and plot it on a price sensitivity map. On the map, the x-axis is the price, and the y-axis is the percentage of respondents who chose that price. It’s the intersections of the graphed data that provide you with the information you need for pricing.

The point where the responses to questions one and two intersect is the point of marginal cheapness (PMC), and the intersection of the responses to questions two and four is the point of marginal expensiveness (PME). The PMC and PME represent the lowest and highest price points that your customers are willing to pay. This is known as the “range of acceptable pricing.”

You can use that range to set your launch price, sale prices, and price increases during the product life cycle.

British economists Andre Gabor and Clive Granger developed the Gabor-Granger method in the 1960s. This price-optimization strategy helps pinpoint the best possible price for your product by determining its price elasticity. It determines the likelihood of purchasing at various prices, so you can plot demand and revenue curves to figure out the best price for maximum revenue.

This method, similar to Van Westendorp, does not consider competitor pricing.

Examples of Gabor-Granger pricing survey questions:

After reading all of the provided information about our product, how likely are you to purchase it at $100?

  1. Extremely likely
  2. Very likely
  3. Somewhat likely
  4. Not so likely
  5. Not at all likely

If the respondent answers with one of the bottom three responses, you can employ skip logic to present them with the same question at a lower price point. Repeat this process until you find the price point that the respondent indicates they are willing to pay.

If the respondent answered with one of the top two responses, you can count them toward a top-2-box score. The percentage of response one is added to the percentage of response two, and the resulting percentage represents the portion of your target market that is likely to purchase your product at the given price.

So, if 10% answered with response one and 35% answered with response two, your top-2-box score would be 45%—the percentage of customers who are likely to purchase your product at the specified price.

You can also ask Gabor-Granger questions like this:

Based on the information we provided about product X, would you purchase this product for $150?

  • Yes
  • No

If the response is yes, use skip logic again to ask if they would purchase at the price of $200. If the answer is yes, they are asked again with a price of $225. If the answer is no, the maximum price they are willing to pay is $200.

The overall data is analyzed and plotted to provide a revenue and demand curve at various price points (price elasticity).

The fourth pricing method that utilizes surveys is conjoint analysis, which is also called trade-off analysis. This form of statistical analysis is used in market research to understand what value customers assign to various features or components of a product, including price. Similar to a real-life shopping experience of comparing multiple products, conjoint analysis uses discrete choice modeling to find out which price and feature have the most influence on the purchasing decision.

A conjoint analysis pricing survey presents participants with combinations of product features or attributes—one of them being price—and asks them to choose between the competing sets. Another option in conjoint analysis is asking respondents to rank the importance of the features presented in the set.

A conjoint analysis survey question may look like this:

Question 1: If you were shopping for a new prepaid cell phone plan, which of the following plans would be most appealing to you?

Company/PlanMint Mobile UnlimitedTello EconomyVerizon Do More Google Fi Simply
Monthly cost$30$10$90$60
Network4G LTE, 5G4G LTE, 5G4G LTE, 5G4G LTE, 5G
Hotspot5GFrom allowance25 GBNot available
SpecialBuy 3 mo, get 3 mo. freeNoneNoneNone
DataUnlimited1 GBUnlimitedUnlimited

Question 2: Why did you choose that plan?

Question 3: Please review these prepaid cell phone plans and indicate which of the following plans would be most appealing to you.

Company/PlanGoogle Fi SimplyTello EconomyMint Mobile UnlimitedVisible Unlimited
Contract lengthMonthlyNo contract3, 6, 12-mo. contractsMonthly
DataUnlimited1 GBUnlimitedUnlimited
High-speed data/mo.22 GB1 GB35 GBUnlimited

Question 4: Why did you choose that plan?

Further questions include more combinations with varied attributes and prices to determine what price and features have the most impact on the respondent’s desire to purchase. 

Pro tip: Don’t present survey respondents with too many data sets, or you risk survey fatigue and confusion.

Conjoint analysis survey questions can also be asked as ranking questions. 

Please rank the following prepaid cell phone plan features in order of importance:

  • High-speed data
  • Price
  • Contract length
  • Hotspot
  • Special offers

Once you’ve chosen the methodology for your pricing survey, it’s time to choose who will be taking the survey. If you haven’t already, you may need to conduct some market research to define your target market and segments. Customer segmentation can be used to define the segments within your target market. The information can then be applied to price segmentation, where prices are differentiated based on willingness to pay.

For your price survey, identify key considerations for participants. You want people who are potential customers, so if your product is designed for senior citizens, you only need participants who are in the 65+ age demographic. If your product has a more diverse group of potential customers, ensure that you are choosing participants that represent your entire target market.

SurveyMonkey Audience is our market research solution that helps connect you with the right people for your pricing survey. Use demographics, finances, living arrangements, and any of our 50+ attributes to find the perfect group of participants for your pricing survey. 

Your product needs appropriate pricing to successfully increase your company’s revenue and profits. Find the price that works best for your target market with one of the options above, or simplify your pricing with our Price Optimization solution with Van Westendorp methodology—save time and discover actionable insights!
And if you need any other market research services, including brand tracking, product innovation, and more, SurveyMonkey is here to help.

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