Price Sensitivity

Something that's been on my mind is how to ask some of the more complex questions in a better way, when I don't have the luxury of time and/or money.  For example, price sensitivity is a popular ask.  But too frequently the scope of studies does not allow for the inclusion of the best suited tools for this job (such as a series of conjoint questions), due to competing research objectives which also must be achieved.

I asked myself, how can I 'satisfice' in these types of situations?  What are the fewest number of questions I can ask that will get me an answer that is "good enough" for my purposes or at least provide some directional insight? More importantly, how can I ask these question(s) in way that is:

1. Intuitive to all respondents

2. Elicits realistic answers from respondents

3. Produces insights that are both impactful and easy to explain to executives 

Below is a simple way get a high level read on price sensitivity when you simply don’t have the time or space to fit it into a survey with an entirely different set of objectives

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Traditional Price Laddering

Whether in a focus group or a web survey, whenever stakeholders have needed to get a read on price sensitivity and there is barely room to squeeze in one more question, we would resort to some sort of price laddering question like this

How much of a premium would you be willing to pay for this product?

	No premium
	10% more
	20% more
	30% more
	40% more

This approach can be problematic for a number of reasons. Take the example above. Firstly, how many people would tell you honestly that that would be willing to pay a 40% premium for something? They know we are going to look at this data and make pricing decisions from it. They will not be inclined to encourage companies to charge huge premiums.  

Secondly, it costs respondents nothing to say they would not pay extra for something. In fact, reasonable or not, more and more customers expect companies to include certain things for no additional cost.

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Alternative Way to Get at Price Sensitivity

Asking about likelihood to purchase at different prices can give you a sense of the point at which customers would be 'Very likely' vs 'Somewhat likely' vs 'Unlikely' to buy.

How likely would you be to purchase this product at each of the following prices?

	Very Unlikely	Somewhat Unlikely	Somewhat Likely	Very Likely
$999
$1,199
$1,399
$1,599
$1,899

Is this perfect? No. Does it provide more information? Yes.  Is it more likely to get a thoughtful response versus the approach on the left. I'd argue yes.

You could also break these up into individual questions for the price shown in each row.

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Output

Using this approach, you can deliver charts like this that often find where the breaks are and are also easy to explain to your audience

Labels aligned right with hard breaks placed to optimize readability.