Pricing research: What it is and how to do it

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Pricing research is a research method used to evaluate e-commerce product and service prices. It analyses how demand varies within the market based on the prices set. It is a valuable resource for brands and retailers as it allows you to observe pricing behaviour and learn how pricing affects business growth and development. Based on this knowledge, the ultimate goal of pricing research is to enable companies to define an appropriate pricing strategy to help improve their profitability. 

Benefits of pricing research for e-commerce businesses 

On the one hand, pricing research provides a benchmark framework. It allows you to define a range of prices you can move between without generating losses or affecting demand. Depending on the market’s context, you can raise or lower prices, within your established range, to increase sales or boost profits. It’s like having a more accurate guide to which strategies will be most successful. 

This is why this information will be key when launching new products. For example, you can better understand the expected performance of penetration pricing when launching new items in a highly competitive market. At the same time, knowing your price range and position in relation to the competition helps you to get ahead of their moves and put forward better offers. 

Pricing research

How to do pricing research 

Before starting the research, it is vital to carry out preliminary data collection: 

  1. Calculate production costs: Consider all the costs involved for your business in producing and shipping each product. This will be your starting point for evaluating and setting prices. 
  2. Research the competition’s catalogue and prices: Start by selecting your direct competitors. 
  3. Select a sample of consumers: Pricing research involves sending surveys to a sample of customers to determine their opinion and their reactions to prices. Therefore, it is essential to select a representative group from your target markets to carry out the research. Also, for the research to be relevant, the sample must comprise people who need the product and would buy it at the right price. 
  4. Choosing a pricing research method: You can select different research methodologies, depending on your needs and objectives. 
  • Van Westendorp: This method studies the prices that customers are willing to pay for different products. 
  • Conjoint analysis: uses surveys to study users’ mental processes when making complex decisions. 
  • Monadic testing: collects customers’ opinions about a concept or product, its attributes, and characteristics. Each item is analysed independently, without comparing it with others. 
  • Gabor-Granger: attempts to define the elasticity of demand by asking survey respondents how likely they are to buy the product at a certain price.  

Each methodology is different and useful for obtaining information that meets your needs. In the Van Westendorp method, the questions are open, and respondents indicate what prices they are willing to pay without bias. However, in the last technique, random prices are shown until the potential customer selects the price that they consider to be most appropriate. 
Pricing research will help you update prices in your current catalogue and set prices for new products. Because there is a wealth of data, pricing tools can help you keep track of your price changes and how demand has responded. They also record your competitors’ prices. They provide a way to facilitate initial research and implement a new pricing strategy.

Angela de la Vieja
Content Manager
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