Price tests with Rogator
Pricing holds enormous potential, no other individual element has such a direct effect and strong leverage on profitability.
- But how can you calculate the right price for a product? The "costs + target profit = gross price" method is the most commonly practised form of pricing. However, this exposes the company to a high risk of missing out on potential profit. If demand for the product is equal to target sales the method works, but the optimal price has been determined purely by chance. Explanation: if demand is greater than expected, this indicates that the price has been set too low. On the other hand, very low demand shows that the consumer views the price as being above the perceived value of the product. The problem is the same in both cases: subsequent price increases or reductions are almost impossible.
- So why not base the price calculation on production costs? This pricing method is not ideal either, since it often overlooks huge profit potential. For example, if we compare the very low production cost of a metallic paint in the automotive industry with the relatively high price customers are willing to pay, this illustrates the risk of unexploited profit potential with production cost-based approaches.
- What other option is there? In many cases, the most effective method is to check your price directly "with the customer". We can assist you with this, using the method best suited to your needs. As well as tools such as "van Westendorp", "Gabor Granger" and price experiments, we also use the conjoint analysis for indirect surveying. This method assesses the customer's price reaction based on an analysis of his or her preferences for alternative product and price configurations. We will be happy to advise you on the implementation of a price test.