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Trade Off & Pricing

To optimise business levels, you need to understand the relative appeal of different product formulations to your customers and the price they are willing to pay.  Drawing on a wealth of relevant experience, BDRC Continental can help you solve your business issues in these areas.

Price sensitivity studies

To measure the extent to which likely uptake for a given offering is sensitive to price, the Gabor-Granger bid technique is often used to draw a demand curve of likely uptake by price level.  This can identify any tipping points at which price becomes a particular barrier to uptake.  The results can also project optimum price points, being the price at which revenue gained (uptake x unit price) is maximised.  We have conducted studies like this for products as diverse as bank accounts, university courses, mobile phone services, hotel stays, subscription TV services and leisure facilities.

Occasionally, the Van Westendorp technique is used for setting optimum price points, usually when we need to consider a very wide range of possible price points.  The output defines the price point which minimises the share of customers who feel that price is either ‘too cheap’ or ‘too expensive’.

Trade-off studies

Trade-off studies require respondents to choose between alternatives, to show their preference structure.  Depending on the method and ‘ingredients’ used, the results can be used to define ideal product formulations; to identify key price points; to measure the relative importance of different product or service attributes; or to identify needs-based customer segments (groups of customers with differing priorities). 

Conjoint

Conjoint is a favoured technique for product design.  Examples include design of optimal membership packages for charities and other organisations and design of appealing credit cards, current accounts and mortgages. 

Pairwise trade-off or Max-Diff

Pairwise trade-off or Max-Diff is a lower cost technique if all we need to know is what attributes are most important to customers.  This brief technique can be embedded in a wider telephone interview.  It is often used in customer satisfaction studies to identify low performing, high priority service attributes - the key focus for urgent action.  This technique was also used in a transport study to define the key drivers of value for money: price was one factor (of course) but other factors such as punctuality, comfort and information were also key – important learning if you want to improve value perceptions without cutting price.

Find out more about our Analytical Techniques, or contact Tony Wornell 020 7400 1003.