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Overview

Methodology & Benefits

FAQs

The Pricing Lab FAQs

Please Find Below A List of Frequently Asked Questions.

  1. What is The Pricing Lab?
  2. What methodologies does The Pricing Lab use?
  3. What process does The Pricing Lab follow to do a pricing study?
  4. Is qualitative pricing research involved?
  5. What type of pricing strategies can be tested by The Pricing Lab?
  6. Can The Pricing Lab develop pricing segments?
  7. Does The Pricing Lab evaluate our pricing programs?
  8. Can The Pricing Lab analyze our data to tell us where we're losing money?
  9. Can The Pricing Lab use our internal data warehouse?
  10. Can The Pricing Lab conduct a pricing study with mobile devices?
  11. I'd like to do a conjoint study to understand the trade-off between price points and product features. Can The Pricing Lab do this?
  12. Can The Pricing Lab do discrete choice studies?
  13. Does The Pricing Lab provide a what-if simulator for a discrete-choice study?
  14. What is A/B testing? Does The Pricing Lab do this?

What is The Pricing Lab?

The Pricing Lab is a division of Data Analytics Corp. that focuses on quantitative pricing research, or QPR. Our belief and our guiding philosophical principle for all our work is "In God We Trust, All Others Bring Data," a statement attributed to the statistician W. Edwards Deming. We believe that data-driven decision making is critical in the pricing portion of your marketing mix. The Pricing Lab develops the numbers, especially elasticities, for solving pricing problems using a variety of methodologies.

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What methodologies does The Pricing Lab use?

The Pricing Lab does not use just one methodology, basically one size fits all. We use a variety of methodologies in general, but we design and tailor an approach suitable for your problem.

Our methodologies include:

  1. Econometric models
  2. Discrete choice models
  3. Conjoint models
  4. Van Westendorp Price Sensitivity Analysis
  5. Gabor-Granger Analysis
  6. A/B price testing
  7. Price waterfall analysis
  8. Pricing landscape analysis

See our Technical Memos for technical discussions on some of these.

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What process does The Pricing Lab follow to conduct a pricing study?

There is no "process" in the sense of a cookie-cutter, rigid, step-by-step recipe for conducting a study. All client questions, needs and concerns are unique. In fact, every client is unique. The Pricing Lab approaches each study with an open mind and attempts to design a study suitable for the client's unique problem and position in the marketplace.

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Is qualitative pricing research involved?

The Pricing Lab focuses on quantitative pricing research for collecting data, statistically examining and modeling that data, and estimating price elasticities. We reserve qualitative research for help in identifying exactly what data must be collected. Otherwise, qualitative data is not the focus of The Pricing Lab.

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What type of pricing strategies can be tested by The Pricing Lab?

The field is wide open. Typical strategies include discounts, rebates, price discrimination (different prices to different segments based on elasticities), and single price per unit.

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Can The Pricing Lab develop pricing segments?

Yes. Knowing your segments is a key part, not just for pricing, but also for marketing. One size does not fit all. Different segments have different price elasticities, and these differences can be used to your advantage. Highly elastic segments can be changed to lower prices, while highly inelastic segments can be charged higher prices. The key is knowing the segments and their elasticities. The Pricing Lab can segment the market and develop your requisite elasticities.

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Does The Pricing Lab evaluate our pricing programs?

The Pricing Lab can evaluate your current pricing programs and make recommendations for changes and improvements, where needed.

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Can The Pricing Lab analyze our data to tell us where we're losing money?

The Pricing Lab can study your data to tell you where you may be losing money. For example, we can do a price waterfall analysis which involves using your internal data to show how your list price is withered down or flows down (as in a waterfall) by discounts, rebates, special promotions, and miscellaneous terms and conditions (e.g., freight payments) to yield a "pocket price" which is the final amount left for you on each unit sold. This analysis can be very useful in revealing how you're losing money. A white paper is available by clicking here.

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Can The Pricing Lab use our internal data warehouse?

Absolutely! The Pricing Lab uses (and collects) whatever data is appropriate for your pricing problem. Data in a data warehouse or data mart provide valuable information regarding time trends in sales and purchase patterns across segments of customers. This information can be used to estimate price elasticities that reflect time dynamics and segment behaviors.

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Can The Pricing Lab conduct a pricing study with mobile devices?

Yes. The Pricing Lab has a data-collecting partner that excels in this capability. Please see our yogurt whitepaper for an example.

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I'd like to do a conjoint study to understand the trade-off between price points and product features. Can The Pricing Lab do this?

Yes. The Pricing Lab can design conjoint studies and perform the required estimation and analyses. See the Technical Memo for a description of conjoint.

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Can The Pricing Lab do discrete choice studies?

Yes. In fact, The Pricing Lab recommends these studies over conjoint studies because they are more reflective of real-world purchase decisions.

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Does The Pricing Lab provide a what-if simulator for a discrete-choice study?

A what-if simulator is a "must have" for any discrete choice study. The reason is that any discrete-choice study typically involves a large number of combinations of product features, brands, and, of course, price points. Because of this complexity, it's not possible (or practical) to analyze each combination. A simulator allows you to test whatever combinations seem appropriate. The Pricing Lab always builds and provides a simulator.

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What is A/B testing? Does The Pricing Lab do this?

A/B testing in general is done with e-commerce and landing-page applications. In each case, the objective is to determine if feature A is better than, the same as, or worse than feature B with regard to a key business metric (e.g., revenue, sales, and customer acquisition to name a few). Customers are randomly assigned to one of the two features when they enter the web site and their behavior is recorded. The results are statistically analyzed to determine which is better. Two options, A and B, is the minimum; more than two can be tested with the same general approach.

A/B testing of price points, discounts, rebates, etc., are certainly possible. The Pricing Lab can design, manage, and analyze the data for an A/B study. There is one caveat, however. It cannot take control of your website for conducting the study because of the complexity of most sites. You would have to provide this expertise.

Please call today at (609) 936-8999 to ask your specific pricing questions not covered above!