![]() ![]() ![]() Also, it is a bit questionable to offer different prices for the same product to different customers, and in the era of social media, it can really backlash. For example, you can disappoint your customers by offering them one price and when they decide to purchase a few days later, another one. You can upset your customers – despite the fact that most of the customers are aware of the dynamic pricing, there is more than one way of upsetting them by A/B testing.Willingness to purchase a product can change in a matter of days (let’s take the start of COVID-19 Pandemic as an example) and the price is not the only factor affecting the decision – for example, if you change some details on your pricing page comparing the page you used for the test, you will need to do the whole testing again. Other statistical factors – numbers are not the only problem.Can’t achieve the statistical significance – for the A/B test, you need a statistically significant amount of test subjects for valid results (so, you will need a lot of customers willing to buy your product).Although this price testing method has its place, it shouldn’t be your primary way of testing prices.įor example, A/B testing can be used for testing landing pages to see how small changes affect the conversion rate, but you shouldn’t use it to test different price points. As the name suggests, you should set two different prices for the same product and see which of the prices performs better for your product. Wait for results – after a decent period from making your pricing decisions, you should check the results those decisions are bringing.ĪB Testing is one of the most well-known price testing methods.Analyze the results and put them into action – use the information you’ve collected for making data-driven pricing decisions.Collect data – conduct the test using the preferred price testing method and gather the important information. ![]() Choose category and products – this should be a category where you are selling a good volume of products.You need to decide for how long you are going to run your test, and when is the best time to start with it. Set the right time – timing is everything.Is it the revenue growth or the profit growth? Set your goal – you need to know what you want to achieve with the price test and the price change that will follow.When we cover that part, we will get to answering what are the methods of determining the price, by giving you an analysis of the most commonly used price testing methods. First of all, we will propose some factors and steps you need to consider before even starting the price test – a sort of a testing framework. The question we are all here for is “How do you do price testing?” but there is no unique answer to it. Pricing multiple tiers – price testing is the best way to decide how to set prices if you have a few different variations of your product – basic, regular, and premium for example.You will not have any historic data to look at, so you will have to rely on the data you gather by price testing. Pricing new products – while it is not that hard to set the price for a product you’ve been selling for a long time, by simply looking at the data you already have, when it comes to pricing a brand new product, it can be more demanding.Creating a good pricing strategy – there is no way of creating a good pricing strategy without the right information, and price testing is one of the vital sources of that kind of information.Measure the elasticity of demand – to put it simply this is the percentage that shows you how the demand changes when you change the price.We understand that this is not a simple task, so we prepared a guide containing the most common price testing methods explained as well as some deeper insights and explanations of the price testing, in order to prepare you comprehensively for this important step.Īs we said, price testing is very important for numerous reasons. This is the key reason why you need to always carry out price testing, before jumping to any conclusions. It is never easy to set the right price and in a price-sensitive society like ours, if you don’t do it right, your business will be in some trouble. ![]()
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