Customer Experience Management

Gabor Granger method: Optimal method for pricing with CX and market research software from QuestionPro

Gabor Granger method price history


With the Gabor Granger method, the van Westendorp price sensitivity method and the conjoint analysis QuestionPro Provides you with important tools for determining product prices

Pricing is a critical success factor

How much value consumers place on products and services so that they consider a purchase is the main question of the Gabor Granger method, a simple but efficient method of price determination. Determining the price of a product or service is an essential step before it is launched on the market of the most critical decisions for any business. It is imperative to price a product in such a way that customers actually buy it and generate a profit at the same time. If the price is too high, there is a risk that customers will not buy it. If the price for a product is set too low, there is a risk that it will not generate any significant profit, even though it is very often bought by customers.

Gabor Granger's method of pricing

The Gabor Granger method of pricing is a technique that is used within market research and Customer Experience Management to determine the price elasticity of products and services. The Gabor Granger method consists of asking potential customers about the likelihood that they will buy a product or service at different price points. The Gabor Granger method was developed in the 1960s by the two British economists and professors at the University of Nottingham, Clive Granger and André Gabor. In 2003, Clive Granger and Robert Engle received the Nobel Prize in Economics for their work in the field of statistical methods for testing economic theories.

How does the Gabor Granger method work

With the Gabor Granger method, also called Gabor Granger pricing technique, respondents are shown different prices for a product and asked about the probability of purchase at different price points. In this way, a sales and demand curve can be created to determine the optimal price to achieve the maximum sales.

Gabor Granger curve to determine the optimal price

Gabor Granger curve to determine the optimal price

Implementation and procedure of the Gabor Granger method

When performing the Gabor Granger method with QuestionPro First of all, survey participants receive a description of the product together with a picture as well as all the features and specifications that distinguish this product. Then different price points for this product are displayed, each linked to the question: "Would you buy this product at price X?" If your survey participant says no, the next lower price point is displayed; if they say yes, a higher price point is displayed. The process is repeated until the pricing model has determined an optimal price point.

The Gabor-Granger Pricing Technique Methodology helps answer the following two critical questions for businesses:

  • Can you increase the price of a product or offer without affecting sales?
  • At which price points does it become clear that the willingness of consumers to pay for the named products or services is increasing or decreasing?

Carry out the Gabor Granger method with the market research and CX software QuestionPro

Creation of the Gabor Granger method

QuestionPro offers you a “turnkey” question type with which you can use the Gabor Granger method quickly and easily without having to program yourself.

First select the question type Gabor Granger from the question library

Gabor Granger pricing with QuestionPro

When the settings mask of the Gabor Granger question type appears, set your price points and describe the product

Create Gabor Granger price points

The starting point of the Gabor Granger method is the price that is to be displayed to the respondents for the first time. Assuming the respondent is ready to buy the product at this price, the next higher price from the given price list is displayed. If the respondent is unwilling to buy the goods at the primary price displayed, a lower price is displayed. This pattern is repeated several times until the highest price point a respondent is willing to pay is found.

QuestionPro offers you the use of the Gabor Granger method with two different price paths, namely sequential and random:

Gabor Granger Prize Paths

  • Sequential: The sequential price path shows the respondents the subsequent prices in the sequential, i.e. pre-sorted order, as you have previously defined the prices. This can be a rising price or a falling price.
    Gabor Granger Method: Sequential Price Path
  • accidentally: In the case of the random price path, the subsequent price is displayed randomly after the respondents' first answer. The algorithm decides whether the user is presented with decreasing price points or increasing price points at random.
    Gabor Granger Method: Random Price Path

Evaluation and data analysis of the Gabor Granger method

The Gabor Granger method is evaluated using the in QuestionPro integrated analysis dashboard.

Gabor Granger analysis

Gabor Granger evaluation

Alternatives: Van Westendorp method and conjoint analysis

There are different approaches and methods for pricing within market research. These approaches include direct methods such as willingness to pay estimation, indirect methods such as the techniques of Gabor and Granger and Van Westendorp, and price / attribute mix methods such as conjoint analysis. Indirect methods are more accurate than direct methods because respondents are exposed to more realistic scenarios. These methods are quick and easy to use. These methods can be used to derive information about why respondents chose not to buy a product or service. Indirect pricing methods are widely used and recognized in market research. Here you can find more information about the van Westendorp method. The market research software QuestionPro makes pricing easy for you!

1:1 live online presentation:
Gabor Granger's method of pricing

In a live demo at an appointment of your choice, we will be happy to show you how you can quickly and easily QuestionPro use the Gabor Granger method and find the optimal price for your products.

Make an individual appointment

You have questions about the pricing process using the Gabor Granger method Simply contact us using the contact form. We look forward to the dialogue with you!

Test software to determine the best price using the Gabor Granger method

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