Price Elasticity Research
- “How much would people really pay for that?”
- “Are our customers as price sensitive as we think?”
These questions are often asked, and often difficult to answer. We offer two approaches to measuring price elasticity.
The Van Westendorp Price Sensitivity Meter was developed as a method for assessing consumers’ willingness to pay for a product. Its primary benefit is its usefulness in establishing the range of acceptable prices. The method uses four basic questions, asked of customers in a survey, to assess consumers’ willingness to pay for their ticket, service or experience. From graphing the responses of the whole sample to all four questions, several key indicators (of optimal price and the upper and lower limits of the ideal range) can be calculated. The questions need to be asked as part of a wider survey, including contextual questions, which we can work with you to design and analyse.
Alternatively, the Baker Richards Price Elasticity Estimator uses an internal “workshop” approach to model elasticity based on the knowledge of key management and front-line staff. We use the data produced during the workshop exercise to demonstrate the impact of changes to price on your occupancy and income.
