Basic economic theory states that that the optimal price of a product or service is driven by supply and demand. It is relatively straightforward for a company to establish the minimal selling price of a product by calculating the cost of providing it, and add a certain level of profit margin. However it’s often puzzling to ascertain the optimal price point that will result in right combination of sales volume and profit. SmartPoint Research’s experience in pricing can help you solve that puzzle.
Pricing is one of the more technical areas of marketing research, and also one of our strengths. We use a combination of sophisticated pricing models, such as: Monadic Price Testing, Price Laddering Testing, The Van Westendorp Price Sensitivity Meter (PSM) Model and Choice-Based Conjoint (CBC) depending on the client’s needs and market dynamics. In pricing research our aim is not to find what the consumers like, but rather to determine what they are willing to pay and to examine the trade-offs they make. Through this exercise we are able to help you determine the optimum price point for your brand that maximizes both your sales volume and profitability.
As a case in point, a popular beverage company recently approached SmartPoint Research to help them determine if there was elasticity in the market for a price increase among one of their premium brands. Leveraging our experience in this area and by applying some of the techniques mentioned above, we were able to determine that there was indeed room for a price increase and identified for them an optimum price point. The client implemented the recommended pricing and realized a two million dollar increase in revenues!
Whether you are launching a new product or reassessing the pricing of an existing one, we have the necessary tools to help you. Contact us today to see how our pricing studies can maximize your brand potential.