The Strategy and Tactics of Pricing, 5th Edition

Chapter 12Measurement of Price Sensitivity

Research Techniques to Supplement Judgment

Quantitative estimates of customer price sensitivity and willingness-to-pay can substantially improve both price setting and price segmentation. Indeed, some estimate of price sensitivity, whether it be quantitative or qualitative, is required for the price setting process described in Chapter 6. Sometimes research can provide very specific estimates of the impact of prices on sales volume. Other times estimates provide only a rough indication of a customer’s willingness-to-pay given a set of circumstances. At their worst, estimates of price sensitivity fail to reflect the real nature of the buying decision, misleading management into making ineffective pricing ...