Pricing research: how to find out what customers will pay, and which method to choose

1. The problem: a price set from costs or from the competitor

A company launches a new product and has to put a price on it. Finance calculates the cost and adds the usual margin; sales looks at the competitor's shelf and suggests going "a little cheaper". Both approaches ignore the only question that matters: what the product is worth to the person buying it. If the price is too low, the company leaves money on the table and sometimes signals poor quality. If it is too high, the product sits on the shelf, and the later discount costs more than a correct price would have cost from the start. Pricing research exists to answer this question before the market answers it for the company.

The same problem arises with existing products: a price rise forced by costs, a new premium variant, a subscription replacing pay-per-use, a product bundle. In every case the decision depends on how sensitive demand is to price and on how much customers are willing to pay for each component of the offer. Without data, the decision is made on instinct, and the internal team's instinct is almost always more optimistic than the market.

2. What pricing research is and which questions it answers

Pricing research is a family of quantitative methods that measure how buyers react to different price levels. Depending on the method, it answers four distinct questions:

• The acceptable range: within which limits the price is credible, below which the product looks suspiciously cheap and above which it becomes unaffordable.
• The demand curve: what proportion of buyers would buy at each price, and which price maximises revenue.
• Willingness to pay for attributes: what a longer warranty, faster delivery, a larger pack or a well-known brand is worth in money.
• Position against competitors: how preferences shift between offers when the price of one of them changes.

The first question needs a simple method; the last two need an experiment. The choice of method depends on the question the decision has to close, not on a preference for a particular technique. It helps to state that question explicitly in the brief, before asking for proposals, as the guide on how to write a research brief explains.

3. When it is the right choice and when it is not

Pricing research is the right choice when the product is new or substantially changed and there is no sales history, when the company is preparing a high-risk price change, when a tiered range (basic, standard, premium) has to be built, or when the price of a bundle or a subscription is being set. It is also useful for institutions and organisations: a fee for a public service, a beneficiary contribution to a programme, the price of a training course.

It is not the right choice in three situations. When the product already has a rich sales history at different prices, statistical analysis of internal data can estimate elasticity better than any respondent statement. When the company can test the price directly in the market, for instance with different prices in comparable stores or in online sales, a real experiment measures behaviour rather than intention. And when the price is fixed by regulation or a framework contract, there is no decision for the research to inform.

4. Direct methods: Van Westendorp and Gabor-Granger

Van Westendorp: the acceptable price range

The Van Westendorp method asks the respondent four questions after describing the product: at what price it would be so cheap that they would doubt its quality, at what price it would be a bargain, at what price it would start to feel expensive but still worth considering, and at what price it would be too expensive to buy. The cumulative distributions of the four answers are plotted on the same chart, and their intersections mark out the acceptable price range and a point at which as many respondents find the price too low as find it too high.

Its strength is simplicity: four questions, a few minutes, a result that is easy to read. Its limit is that it never asks whether the respondent would actually buy and never places the product next to its alternatives. A purchase-intention question at the stated prices is therefore often added, which allows a rough estimate of volume.

Gabor-Granger: the demand curve

The Gabor-Granger method shows the respondent a price and asks how likely they would be to buy. Depending on the answer, the next price goes up or down until each respondent's threshold is found. The answers produce a demand curve: the proportion willing to buy at each level. Multiplying each price by the share of buyers gives a revenue curve, whose peak indicates the revenue-maximising price under the study's assumptions. The starting price is rotated across respondents so that the first price seen does not become an anchor for everyone.

5. Indirect methods: conjoint analysis and discrete choice

Direct methods share one weakness: they ask the respondent about price, and the respondent knows they are being asked about price. Conjoint analysis gets around this. The product is broken down into attributes (for example brand, size, warranty, delivery and price), each with a few levels, and the respondent rates or chooses between combinations of those levels. Nobody is asked directly how much price matters; its importance emerges from the trade-offs the respondent makes between attributes.

The variant used most often today is discrete choice (choice-based conjoint): the respondent sees, several times over, three or four offers built from an experimental plan and picks one of them or the option "I would buy none of these". The task resembles a real decision at the shelf. The choices yield the utility of each attribute level, the relative importance of each attribute and, by relating utilities to the price coefficient, the willingness to pay for each feature. The utilities feed a market simulator in which scenarios can be tested: what share of preference the offer would have at 120 or at 150 lei, or if the competitor cut its price by 10%.

6. How it is designed: sample, instrument, fieldwork

The sample is drawn from actual or potential buyers of the category, not from the general population. Someone who never buys coffee capsules has no price reaction that matters for a new type of capsule. The target group is defined and sized beforehand, using the approach in the guide on market sizing and segmentation. Every segment for which a separate price decision will be made needs enough respondents: for direct methods, a few hundred in total; for discrete choice, usually at least 200-300 respondents per segment analysed, depending on the number of attributes and levels.

The instrument describes the product in the same way for every respondent and as close as possible to how the buyer will see it: photograph, description, pack, terms. Price questions come after the description and before any discussion of competing brands, so as not to colour them. When several prices are tested without conjoint, the monadic version is the cleanest: each respondent sees a single price, and groups of respondents with comparable profiles are compared with each other. The general rules of wording apply in full, as the guide on questionnaire design shows.

Fieldwork is usually online, through CAWI and online panels, because conjoint tasks require visual presentation of offers and complex randomisation. For populations poorly covered online, face-to-face interviewing on tablets allows the same tasks at a higher cost per interview.

7. Analysis: from curves to a pricing decision

The output of pricing research is not a number but a set of relationships. The report shows the acceptable price range, the demand and revenue curves, the relative importance of the attributes and the willingness to pay for each, the differences between segments and, for conjoint, the scenario simulator. The pricing decision combines these relationships with costs, with the positioning strategy and with the likely reaction of competitors, which no respondent can predict.

A hypothetical example shows how the results are used. A dairy producer tests a reduced-sugar variant. The Van Westendorp curves show an acceptable range between 18 and 26 lei; conjoint analysis shows that the claim "no added sugar" is worth about 3 lei to buyers in the health-conscious segment and almost nothing to everyone else. The decision is no longer "what price do we set" but "who is the product for": 24 lei, positioned for the health segment, or 20 lei for the whole category at a lower margin. That is the question strategic marketing consulting works through.

8. Limits and common errors

• Overstated willingness to pay. Respondents pay nothing when they answer, and for new products they tend to claim they would pay more than they actually do. Results are read as relationships between prices and between segments, and absolute figures are calibrated against real sales data where it exists.
• Price without context. A product rated on its own looks more valuable than it does on the shelf next to three cheaper alternatives. Direct methods lack that context; discrete choice partly supplies it.
• Anchoring. The first price seen influences every later answer. It is prevented by rotating prices and by monadic designs.
• The wrong sample. Respondents from outside the category pull the curves towards low prices and hide the segment that would pay more.
• Too many attributes in conjoint. Beyond a certain number, respondents simplify the task and choose on price alone or on brand alone, and the model reports an importance that does not exist.
• Ignoring competitor reaction. A price that is optimal in a frozen market can become wrong if the competitor responds the following week.

9. Pricing research methods compared

Combinations are common. A concept study can include a Van Westendorp module, as in the guide on product and concept testing, and a conjoint study can be preceded by a few qualitative interviews that identify the attributes buyers genuinely take into account.

10. What to ask the agency

• The decision question stated explicitly: range, demand curve, value of attributes or competitive scenarios.
• The reasons for the chosen method for that question, and for the ones rejected.
• The definition of the target group and the screening criteria for category buyers.
• Sample size for every segment that will be priced separately.
• For conjoint: the list of attributes and levels, the experimental plan and how impossible combinations are excluded.
• Measures against anchoring: price rotation, monadic design or randomisation.
• How results will be calibrated or read cautiously given overstated intention.
• The deliverables: curves, tables by segment and, where relevant, a simulator the company's team can use.

Price is the marketing decision with the fastest effect on profit and, as a rule, the one made with the least data. Well-chosen pricing research does not replace managerial judgement, but it gives that judgement a range, a curve and a list of trade-offs to stand on. If you are preparing a launch or a price change, the Perspicuus quantitative research team can help you choose the method that fits your question.

See also: Quantitative research Strategic marketing consulting CAWI and online panel Product, concept and ad testing Market sizing and segmentation Multivariate analysis: regression, factor, cluster

The Perspicuus research team · 19 January 2026