Deciding on a price for your new products or services can be tricky.
Consumer expectations are constantly changing on the demand side. While logistics and internal resources largely determine what is possible on the supply side.
So how do you make an informed decision on pricing? Enter pricing sensitivity surveys.
This type of market research offers you and your organization a reliable, accurate way to land on a price tag that works for customers, you, and your bottom line.
In this blog post, we'll cover all things price sensitivity testing: what it is, how to measure price sensitivity through surveys, and example questions to include.
What is a Price Sensitivity Survey?
A pricing sensitivity survey is a quantitative market research approach used to identify and optimize pricing for a product or service.
The ultimate goal is to find the best balance between a fair price that attracts significant interest from potential buyers while also being profitable for the seller.
Why is Price Sensitivity Testing Important?
Based on fundamental economics, pricing sensitivity surveys are designed assuming a higher price will appeal to fewer potential customers.
Likewise, a lower price will appeal to more potential customers. Using a series of calculations, this type of survey can often provide a business with direction on what price level will return the highest expected revenue.
A well-constructed pricing sensitivity survey will provide a business with the overall appeal of or willingness to buy the product or service at various price points.
How to Measure Price Sensitivity with Surveys
A price sensitivity survey follows the same steps as a typical online survey. This includes writing the survey, programming it, fielding the survey to a target audience, and analyzing the results.
Below, our online survey agency shares a real-world example of how our team conducted price sensitivity testing to give you a better idea of the process.
1. Kickoff meeting
A full-service insights and strategy firm in Minneapolis, MN partnered with Drive Research to conduct a price sensitivity survey for a medical technology company in the UK.
As with any study, our market research team began with a kickoff meeting to dive deeper into the client's goals and objectives.
The goal of the market research project was to assess the pricing levels and structures of a new care management platform to inform the value it could demand in the marketplace.
2. Writing and programming the survey
To address the objectives of the insights and strategy firm and the medical technology client, Drive Research recommended a quantitative online survey among potential users within the U.S. geography.
An important component of the survey design was having all respondents evaluate the same standard offering.
Keeping the description and features constant for the tested patient management platform ensured pricing was the only variable that was changing.
For example, each respondent assessed how reasonable the base price level was for the platform.
- If the respondents deemed the first price level reasonable, they then evaluated a slightly higher price level to see if the cost was still reasonable or if they’d reached their breaking point.
- If the respondents found the first price level to be unreasonable, they were shown a follow-up price level that was slightly lower. The idea here was to see if respondents would find a lower price level more reasonable or if there was still a gap in their expectations.
This figure represented the target pricing for the client’s platform.
3. Collecting survey responses
Next, it was time to field the survey. Our online survey company always recommends fielding surveys in two phases.
The first phase is a soft launch to a small sample of respondents. This is an added data quality check to assure the questionnaire is programmed correctly and effectively.
After 24 hours, we move the survey into a full launch.
Details of the fieldwork for the pricing sensitivity survey included:
- Respondents were a mix of orthopedic surgeons and non-clinical decision-makers in a medical setting.
- The survey was blinded to the non-customers of the brand. This meant respondents did not know it was sponsored by the medical technology company when starting the survey.
- The survey received 150 responses.
- The online survey took an average of 15 minutes for the respondent to complete and included 53 questions.
- Fieldwork for the survey began on February 24 and lasted until March 15, 2021.
4. Analyzing the results
As a reminder, each respondent assessed how reasonable the base price level was for the platform.
On the backend during the analysis, our market research company used pricing analysis techniques to calculate how many total respondents found the platform pricing reasonable at each of the three levels.
This type of analysis typically reveals at which price point you can optimize revenue.
Let’s say we have the following simple data as an example:
- 20 total respondents find the $500 price level reasonable
- 100 total respondents find the $300 price level reasonable
- 200 total respondents find the $100 price level reasonable
Calculating out the potential revenue at each pricing level, we get the following:
- $10,000 at the $500 price level
- $30,000 at the $300 price level
- $20,000 at the $100 price level
From these calculations, we see that the $300 price level may have the most potential of the three tested price levels.
This doesn’t necessarily mean the $300 price tag is your end-all and be-all, but it offers valuable direction for pricing your product or service.
5. Taking action with the results
The detailed findings from the survey outlined in a market research report remain confidential with the insights and strategy firm and the medical technology client.
The comprehensive research report included background and methodology, an executive summary of findings, recommendations, and an appendix.
Additionally, the appendix featured a detailed question-by-question breakdown of the survey and a final copy of the survey document.
The pricing sensitivity survey answered the following research objectives:
- What solutions are currently being used for patient care management?
- How appealing is the new patient care management concept?
- What features will provide value for providers?
- What price points are acceptable for potential customers?
- What is the decision-making process for patient care management solutions?
Other deliverables included an Excel cross-tabulation banner file breaking the data down into key segments and a full data file showing all responses.
The data and findings from the market research provided the client with direction on which pricing levels and structures may be the best fit for its strategy moving forward.
Price Sensitivity Survey Example Questions
Below are great example questions of how to ask about price sensitivity in a survey.
- How likely are you to buy a product/service at the current price?
- Would you buy the same product/service if the price was 10% higher/lower?
- At what price point would you consider the product/service to be too expensive?
- At what price point would you consider the product/service to be a great value for the money?
- How does the price of this product/service compare to similar products/services in the market?
- Would you be willing to pay a premium price for higher quality or more features?
- How important is price to you when making a purchase decision?
- Have you ever switched to a cheaper product/service because of its price, even if you liked your original product/service?
- Would you be willing to wait for a discount or promotion to buy the product/service?
- Would you consider subscribing to the product/service on a recurring basis if the price was reasonable?
- How often do you compare prices of similar products/services before making a purchase?
- How much would you be willing to pay for a premium version of the product/service?
- If the price of the product/service increased, would you still recommend it to others?
- How does the price of the product/service affect your perception of its quality?
- Would you be willing to pay more for the product/service if it was environmentally friendly or socially responsible?
Price sensitivity surveys are a critical tool for businesses to understand their target buyer’s willingness to pay for their products or services.
By conducting price sensitivity testing, businesses can get valuable insights into their customers' attitudes toward price, which can help them determine optimal pricing strategies.
Consider working with an online survey agency like, Drive Research. Our team has the experience and knowledge to conduct online pricing surveys.
We can help your business make informed pricing decisions that can help increase sales and revenue while maintaining customer interest and satisfaction.
Drive Research is a national market research company serving all industries and organization types. Our team of experts has extensive experience in various pricing studies and methodologies based on a client’s needs.
Interested in learning in receiving a proposal or quote for a pricing study? Contact our team today!
- Message us on our website
- Email us at [email protected]
- Call us at 888-725-DATA
- Text us at 315-303-2040
As a Research Manager, Tim is involved in every stage of a market research project for our clients. He first developed an interest in market research while studying at Binghamton University based on its marriage of business, statistics, and psychology.
Learn more about Tim, here.