Pricing is hard to get right, overpricing can turn off customers, and under-pricing can make products seem cheap. Employee salaries, competitor’s prices and other variables need to be taken into consideration.
As a market research professional, we’ll let you in on a little secret: the key to setting the perfect price for your product or service is through pricing research. Don’t leave your revenue up to chance. Invest in pricing research to make data-driven decisions that will skyrocket your profits.
Pricing research can reveal important information about customer behaviour, preferences, and willingness to pay. Understanding how customers perceive the value of your product/service and how much they are willing to pay for it allows you to make informed pricing and product positioning decisions. This knowledge will allow businesses to focus on product strengths, as this will dictate the proper pricing model.
Let’s dive into some additional ways that pricing research can help you make smarter pricing decisions, reach new customers, and boost your profits.
- Pricing Decision Validation: Pricing research can assist businesses in validating pricing decisions before they are implemented. Businesses can get feedback on how their target audience responds to different price points by testing different pricing scenarios with a sample of potential customers. This can assist businesses in making more informed pricing decisions and avoiding costly errors.
- Market Segmentation: Pricing research can also assist businesses in identifying different market segments based on their willingness to pay. Businesses can tailor their pricing strategies and product offerings to different customer groups by segmenting the market based on price sensitivity. This information is especially useful for companies looking to launch new products or services into the market. Understanding how customers react to various price points allows you to fine-tune your pricing strategy to maximise revenue and profitability.
- Tracking Changes Over Time: Pricing research is not a one-time process. Pricing research can be an ongoing process, helping businesses track changes in customer behaviour and preferences over time. By conducting periodic pricing research studies, businesses can monitor changes in customer perceptions and adjust their pricing strategies to maximise revenue and profitability. Overall, pricing research is an essential component of any successful pricing strategy.
- Customer Expectations: Pricing research is essential for expanding your horizons, markets, startups, and competitive success. Obtaining absolute numbers sheds light on consumer expectations and demand elasticity. Customer loyalty is increased as a result of this practice. Price research allows you to understand the limits of the price range available to you, allowing you to maximise profits. Pricing research enables you to understand where 1-2% price changes can result in 10-20% profit.