A pricing survey helps you determine how much people value your product and what they’re willing to pay for it. Instead of guessing what price might be successful based on varying competitor prices or what seems like a fair markup on your product or service, pricing surveys can pinpoint your optimal price based on real data from your target customers.

Why are pricing surveys important?

Pricing surveys are an essential way to make sure you’re pricing your products correctly. Choosing a price for your product or service is a very complex process, and there are a lot of external factors that ultimately determine if people will pay for your product or not.

A pricing survey (done well) will help reveal what’s really behind your customers’ purchase decisions and give you the answers you need to optimize your pricing strategy.

Using a pricing survey, you can determine your acceptable price range, what features customers are willing to pay the most for, the value your brand has against your competitors, and more. And it all starts with survey questions.

How to ask pricing questions in a survey

How you ask your pricing questions depends on the type of analysis you want to do and the answers you’re looking for. There are some simple methods of asking pricing questions that can give you a ballpark figure of where your price should be, and then there are more advanced pricing analysis tools that can tell you exactly how much value each feature of your product adds, and how much more you can charge for it.

Pricing survey example questions

First, let’s take a look at two simple ways of asking customers how much they would pay for a product or service. The first question uses a free text format where respondents enter their own amounts:

How much would you be willing to pay for {this product/service}?

This is the simplest way of getting a starting price point for your product or service. However, the challenge with this question is that respondents aren’t taking competitor prices or other external factors into account. This means that their answers may not accurately reflect what they’d be willing to pay when faced with alternatives.

This is especially true if customers are unfamiliar with your product and they don’t have a realistic idea of how much it would cost. But if consumers are fairly familiar with your product or service category, it can give you a general idea of what prices come to mind. Another option is to use a price rating scale:

If {this product/service} was priced at ${price}, how likely would you be to purchase it?

• Very likely
• Somewhat likely
• Neither likely nor unlikely
• Somewhat unlikely
• Very unlikely

A direct question like this can be used to gauge customers’ acceptance of a specific price point. However, by only evaluating pre-determined price points, you may not be able to fully understand what value customers would place on your product. In addition, respondents tend to be overly optimistic and even though they say they are likely, they may not be considering how other alternative products would affect their decision.

In order to get more in-depth data from your survey and determine your optimal price, you’ll want to use other types of analysis. Here are four main pricing analysis techniques we’ll cover:

• Willingness to pay
• The Van Westendorp Pricing Model
• Expected Cost
• Conjoint Analysis

Don’t worry, they’re not as confusing as they sound. Let’s dive into what these techniques can do.

Willingness to Pay

In the world of pricing research, the term “willingness to pay” refers to the price that consumers would be willing to pay for your product or service. A willingness to pay model is a pricing research strategy that asks precisely this question to consumers.

There are two types of willingness to pay questions: open-ended and close-ended. Let’s dive deeper into each one and when each would be best to use.

Willingness to Pay: Open-Ended

An open-ended willingness to pay question uses a simple format. After showing the consumer your product or telling them about the concept, you ask, “What would you be willing to pay for this product?” This is followed by an open text box so the consumer can write down whatever price they would pay.

Keep in mind that you want these answers to be in a consistent form. If your product or service requires a repeated cost like a monthly subscription, write “per month” or “per year” after the text box so consumers can answer appropriately.

Open-ended willingness to pay questions are particularly helpful if your product isn’t something extremely different from what exists in the market so consumers already have a general familiarity with the concept. If your product is completely unlike anything that exists, consumers will have a hard time pulling a price out of the air.

Willingness to Pay: Close-Ended

Another way to ask about willingness to pay is with a close-ended or multiple-choice question. The question itself is the same: “What would you be willing to pay for this product?” Instead of a text box, though, you provide several options and allow respondents to select the one they think is most appropriate.

In these questions, it’s best to have a target price in mind. Set that target price as the middle option and add a few lower-priced and a few higher-priced options. Because of this, close-ended willingness to pay questions are appropriate if you have already done enough pricing research to have a target price in mind.

After you collect your data, what’s the best method for how to calculate willingness to pay? Calculating the results will vary based on whether you use open-ended or close-ended questions. For close-ended questions, it’s a simple matter of seeing which answers were most common and how they align with your target price. It’s also a matter of seeing how many people would be willing to pay your target price or above and whether that percentage is high enough to give you a reasonable customer base.

Calculating a willingness to pay conclusion for open-ended questions is a bit more complex. You can group responses into different ranges, such as $10-$15, $15-$20, and so on, and evaluate how many people responded within each category.

Pros of the Willingness to Pay Model

What advantages are there to using the willingness to pay model? The primary benefit is that it offers clear, straightforward data that is easy to analyze. While evaluating the data without a specialized survey tool can be time-consuming, the data is relatively straightforward. The willingness to pay model is also particularly easy for survey respondents because it requires just one question to get the data you need.

Cons of the Willingness to Pay Model

While the willingness to pay model is easy for both you and your respondents, it does have disadvantages. Most notably, by asking only one question, you’re missing considerable context. You might know the price each customer says they are willing to pay, but how much higher could you price the product before you lose their business? How low of a price is so low that customers will assume your product is of low quality?

The Van Westendorp Pricing Model

The Van Westendorp Pricing Model (or price sensitivity meter) is a research method designed to help you position your product by gauging consumers’ perception of its’ value. This technique uses a series of four survey questions that allow you to indirectly measure what consumers perceive to be an acceptable price range for your product. In your survey, you would first present a description of your product or service and then ask respondents the following questions:

• At what price would you begin to think the {product/service} is so inexpensive that you would not buy it because you questioned its quality? {text box}
• At what price would you think the {product/service} is a good value? {text box}
• At what price would you think the item is slightly expensive, but you still might consider it? {text box}
• At what price would you begin to think the item is too expensive to consider purchasing? {text box}

These questions allow you to see at what price points respondents perceive your product to be too cheap, cheap, expensive and too expensive. When you graph this data, you can then determine your optimal price point based on where the lines for each category intersect. You can also determine your value positioning price point, premium positioning price point, and acceptable price range.

If you have experience building cumulative frequency graphs, you can do this analysis yourself, or you can use a survey platform with a team that will build the charts and analyze your results for you. The Van Westendorp Pricing Model is relatively easy to implement and can provide better insights than standalone willingness to pay questions, but it still has limitations.

Pros of the Van Westendorp Pricing Model

The Van Westendorp pricing model has been used fairly frequently for nearly 50 years now. Why has it stood the test of time? There are multiple benefits that make it a practical and useful tool in your pricing survey.

Simplicity

While the charting might look complicated, at its core, the Van Westendorp model is simple and straightforward. It uses just four questions, charts the answers to those questions, and finds the places where those charts meet. The questions are easy for respondents to answer and the data is relatively easy to analyze for a conclusion.

Flexibility

Along with its simplicity, the Van Westendorp model gives you flexibility by showing you not only one ideal price but the full acceptable range. If you plan to conduct A/B testing in your pricing to find the “sweet spot” that brings in the highest profit, you’ll know what your upper and lower limits are from the start.

For this same reason, though, it’s important to understand what you’re getting. The Van Westendorp model doesn’t give you a solid answer about the ideal price in black and white. If that’s what you’re looking for, it’s better to either supplement or replace the Van Westendorp pricing model with a more precise model.

Cons of the Van Westendorp Pricing Model

There are two major downfalls of the Van Westendorp Pricing Model: It doesn’t provide context and it doesn’t take into account any features of your product other than the price.

It lacks context because it doesn’t allow respondents to compare competitor prices and products. In the real world, purchase decisions are rarely an isolated choice. Competitor prices can heavily influence a customer’s willingness to pay for your product, which is not captured in the Van Westendorp Model.

Another limitation is that the Van Westendorp Model doesn’t consider or evaluate specific features of the product, which also have a big impact on customers’ willingness to pay. You won’t be able to measure which of your features are adding the most value to your product or what combination is the most profitable.

This is why it’s important to dive deeper into your pricing research with conjoint analysis. If you choose to use a Van Westendorp Model as a starting point, you can use conjoint analysis to validate your results and find out more about your customers’ preferences. But before we dive into conjoint analysis, let’s discuss one more basic pricing model you’re likely to come across in your pricing research.

Expected Cost

In pricing research, the expected cost pricing model is a type of pricing survey question that asks consumers what they would expect to pay for your product. This is different from the price they would be willing to pay because it asks them to consider the value they perceive your product to have, not necessarily whether that value would be within their budget.

Similar to the willingness to pay model, there are two ways to use the expected cost pricing model: with open-ended or close-ended questions. Let’s take a look at each path and when they might be best used.

Expected Cost: Open-Ended

If you want to find out what price a consumer would expect to see on your product, one way to ask is with a simple open-ended question: “What would you expect to pay for this product?” The answer format is an open text box so the respondent can fill in any number they choose.

An open-ended expected cost question gives your respondents free reign to give you their genuine, honest answer without being biased by the multiple-choice options you give them. It does have its limitations, though, like more complex data analysis than close-ended questions and asking consumers to estimate a price when they may not have a frame of reference. For that reason, open-ended questions are best used for products that aren’t completely novel but have somewhat comparable competitors so consumers are already familiar with the concept.

Expected Cost: Close-Ended

If your product or survey isn’t ideally suited to open-ended expected cost questions, a close-ended question may be better. You still ask your respondents a single question about the price they would expect to pay for your product, but you give them specific options to choose from.

This type of expected cost question may be significantly simpler for both respondents and researchers than an open-ended question. It also allows you to make sure all the responses are somewhat reasonable, so it’s helpful for consumers who might be unfamiliar with the type of product you’re offering and may not even know what ballpark value to place on it.

Pros of the Expected Cost Pricing Model

The expected cost pricing model can be helpful because it doesn’t muddy the waters–the question is simple, straightforward, and free from personal factors. While the willingness to pay model can open doors for respondents to filter their answers through their personal circumstances, such as, “I’d only be willing to pay $X because money is tight right now,” the expected cost model takes personal circumstances out of the equation. It’s merely a matter of asking what price tag consumers would expect to see on this product.

Cons of the Expected Cost Pricing Model

While the expected cost pricing model has promise, it also has limitations. Most prominently, it tells you what consumers believe would be a reasonable price for your product, but not whether they would be willing to pay it.

At the end of the day, the expected cost pricing model has a useful purpose, but it does leave some questions unanswered. For a thorough pricing study, it can be helpful to combine expected cost questions with other types of pricing questions like willingness to pay and the Van Westendorp model to have a more thorough understanding of your customers’ thoughts. However, even with a combination of these models, you may miss some of the external factors that will impact your consumers’ purchase decisions.

Conjoint Analysis

Conjoint analysis is a highly effective way to measure how much consumers value certain features or attributes of your product/service. This technique breaks your product down into its’ main attributes (and levels of those attributes) and asks respondents to make choices based on combinations of those attributes (to reveal their preferences). These attributes could include things like size, design, brand, claims, price and more.

There are a couple of types of conjoint analysis, but the most common and most effective is choice-based conjoint. Choice-based conjoint (or discrete choice) analysis uses different combinations of your product attributes to create product profiles and then asks respondents to choose between these different product concepts. Here’s an example of what a respondent would see during a discrete choice exercise.

Conjoint analysis can be a useful part of your pricing research, but like any other strategy and pricing model, it has a time and a place. Let’s examine the top pros and cons of conjoint analysis to keep in mind.

Pros of Conjoint Analysis

One of the chief benefits of conjoint analysis is its ability to offer a uniquely realistic look into consumers’ buying choices. This method simulates a more life-like buying scenario where consumers have to choose between alternatives. This means you’ll get more realistic data on consumers’ willingness to pay based on the choices they actually make– not just what they say they’ll pay.

Along with this added realism, conjoint analysis allows you to see the comparative value of different features directly in a way that other pricing models don’t. You can measure the isolated impact of specific features of your product.
Another advantage of this setup is that you can include competitor product profiles, so you can use brand as an attribute and measure exactly how much value your brand name adds to your product.

Cons of Conjoint Analysis

As beneficial and informative as conjoint analysis can be, it has downsides. Primarily, this pricing survey model is complex and work-intensive for both you and your respondents. Setting up the survey takes time because you need to set up each of the comparisons with different combinations. Depending on the number of questions you set up, conjoint analysis is typically also more time-intensive than other pricing models. However, this model provides some of the most detailed pricing data and may be worth the investment upfront.

Selecting Survey Participants

After you’ve decided on a methodology for your pricing survey, the next step is to determine who to survey. The aim is to reach respondents who match your consumer base as closely as possible.

To do this, you need to identify the key criteria for your respondents. You want to only survey people who could be potential customers. For instance, if your product or service is designed for parents, you only want to survey people who are parents or expect to become parents.

At the same time, you want your survey group to capture the diversity of your audience. It’s important to ensure that you’re surveying people of different regions and locations, ages, ethnicities, income levels, and so on.

The survey platform you choose can make this type of strategic targeting possible. GroupSolver, for instance, partners with several global survey panels to recruit respondents from the regions you choose around the world. Our panel partners use your screening criteria to survey as large of a group as you want within your specified parameters. This type of precise targeting, along with a well-designed pricing survey, gives you data that is accurate, relevant, and actionable.

Managing Data Quality

Your pricing survey results are only useful if they represent the accurate opinions of your consumer, and that’s why maintaining data quality is of the utmost importance. Even well-meaning respondents may misread a question, get distracted, or enter a typo–and an extra 0 can make a huge difference in your data.

If you’re performing your own data analysis in-house, filtering out unreliable data and compensating for outliers can be complex. It adds another layer of time and work, opening more room for error and delaying your ability to get that finished report in your hands, but it’s essential for maintaining data quality.

The other option is to use an advanced survey tool that performs data quality management for you. Part of GroupSolver’s sophisticated data analysis involves identifying and filtering out nonsensical answers and ensuring that your data is of the highest quality possible.

Putting It All Together

Developing a well-constructed pricing survey is all a matter of choosing the right methodologies and taking the most important considerations into account. So which methodology is best and how can you use it to create an effective pricing survey?

While it can vary in different use cases, the best strategy is typically to focus on choice-based conjoint analysis and supplement it with the willingness to pay, Van Westindorp, and expected cost models to add clarity and specificity.

With choice-based conjoint analysis, you can see exactly how much value consumers place on your product attributes and what combination they’re willing to pay the most for, so you can set your prices accordingly. Then, use data from willingness to pay, Van Westendorp, and expected cost questions to zero in on a target price range that best suits your consumers.

Furthermore, you can use additional models to solidify your pricing decisions. For example, using a probability of purchase model (likelihood people will buy your product) you can measure the price premium of a specific feature and come up with a price point that makes your product attractive compared to your competitor’s offerings.

Another possibility is to use a market share model to measure the impact of changing the price of your product, or introducing a new product, on your brand’s market share (i.e. the percentage of sales your company captures in your industry).

However, all of these great insights require more advanced statistics and analytical capabilities. Thankfully, the GroupSolver® team can do all of this for you. From survey set up to full-scale pricing analysis–our advanced survey platform makes finding your optimal price easy.

Leave the heavy-lifting to the experts

GroupSolver® has worked with Fortune 500 hundred companies across the board to identify the right price for their product and service offerings. From top multinational coffee chains to global consumer goods manufacturers, our pricing research fits every need.

Our intelligent survey platform also allows you to dive even deeper into your pricing studies with our AI Open-End™ technology. We can quickly validate the consumer preferences revealed in the pricing tests by quantifying qualitative feedback on your products. Not only will you know what value consumers do or don’t place on your products, but why they feel that way. This puts you in an even better position to nail your pricing strategy.

Here’s an example of qualitative insights we collected for a client in the coffee industry using our AI Open-End™ technology.

What are some specific reasons why you purchase {client’s coffee brand} over other brands of whole bean or ground coffee? Please be as detailed as possible.

Intrigued? Have questions? Learn more about our technology and research solutions or contact us for a quick demo of our platform.