Surveys
Introduction
Meera is a founder of a project management app. After looking up competitor pricing, she decides to price the product at ₹999 a month. However, after a few weeks of launch she sees a slower than expected sign-up rate. Some customers are claiming it is too expensive. While her existing customers are happy to pay this price. Meera is now questioning if she has priced her product correctly.
Should she price her product cheaper to get more customers, or has she actually missed an opportunity to price it higher?
Pricing can be challenging to get right. Often it can be based on competitor pricing, assumptions or a founder’s gut feeling. It can be hard to know what your customers think.
A Willingness to Pay Survey will allow you to gain structured feedback from potential or current customers. This will help understand what they would pay for the product/service, how much they feel it is worth and at what price they feel it is too expensive.
This article will show you how Willingness to Pay Surveys work and provide you with the best pricing research methods. We’ll look at the best questions to ask, analyse the responses and make informed pricing decisions.
What is a Willingness to Pay Survey?
Willingness to Pay (WTP) Surveys are a type of pricing research survey. They help businesses understand how customers feel about the value of a product/service/feature/plan by asking how much they would pay for it.
For example, if a company launches a new online design tool they can ask potential customers how much they would pay per month. Would they pay ₹299, ₹499 or ₹799? From the responses, it can be seen how expectations change.
This is different to a general customer satisfaction survey. A Willingness to Pay Survey looks at how customers feel about the value of the product. Whereas a satisfaction survey looks at how they felt about the product in general.
Willingness to Pay Analysis can be carried out when launching a new product, adjusting subscription prices, adding premium features, adjusting current subscription plans or looking at new customer segments.
A Willingness to Pay Survey does not mean people will actually pay that price. They may say they would pay but when it comes to spending real money they may not. A Willingness to Pay Survey should be used as guidance.
Why Should I Carry Out Willingness to Pay Research?
Whilst a product may be amazing and targeted effectively, it might suffer if it is not priced correctly.
Customer pricing research will help you make more informed decisions.
Find a realistic price range
A pricing survey can help you understand where customers feel the product is affordable, expensive or too expensive.
Avoid under and over pricing
Under pricing can cause a loss in revenue and customers may feel the product isn’t valuable. Over pricing can put off potential buyers. By understanding how customers feel about pricing you can consider the risks.
Create better pricing structures
If you are a SaaS company or subscription, Willingness to Pay research can help understand what features customers are looking for. This can help your team create more thoughtful free, basic, professional and enterprise plans.
Understand your different customer segments
A freelancer, small business and large organisation may all place different values on the product. By segmenting your responses you can understand the differences.
Make informed business decisions
Pricing can be a heated topic as people will have differing opinions. By carrying out research you will have a more consistent way of comparing options, making informed decisions and identifying any assumptions you need to test.
4 Pricing Research Methods
There are several pricing research methods. Each one will ask a slightly different question. Depending on what you are selling and what decision you need to make, you can decide which one to use.
1. Willingness to Pay Question
This is the simplest method. You can describe the product and ask how much they would be willing to pay.
Example:
What is the maximum amount you would be willing to pay per month for this project management tool?
This can be useful for early research. However, it can be difficult to get accurate responses. Customers may guess, give a lower price to avoid paying too much or struggle to estimate a price when they don’t see alternatives. This should be used as a starting point.
2. Van Westendorp
The Van Westendorp method uses 4 questions to help understand how customers feel about different price points. It can be used to understand what price range customers would find acceptable.
The questions are:
At what price would you feel the product is too cheap and you wouldn’t believe its quality?
At what price would you feel it is a good deal?
At what price would you feel it is starting to get expensive but still worth considering?
At what price would you feel it is too expensive?
These responses can be plotted on a Price Sensitivity Chart to understand key price points and what price range customers may find acceptable.
This can be useful if you have a product idea but aren’t sure what price range to put it in. However, it will not take competitor pricing into account and cannot guarantee it will give you the price that will generate the most revenue.
3. Gabor Granger
The Gabor Granger method will help you understand how interested customers are in purchasing at certain price points.
Rather than asking customers what they would be willing to pay you can show them a product at a specific price. Ask them how likely they would be to purchase. Depending on their response you can get a higher or lower price.
Example:
How likely would you be to purchase this software for ₹799 per month?
You can repeat this for ₹599, ₹999 etc.
This can be useful if you already have a few prices to look at. It can also help you understand how much revenue you could get by combining the purchase intent rate with the prices you are testing.
4. Conjoint Analysis
Conjoint analysis is useful if customers are looking at a few different product features and prices.
Rather than asking how much they would pay you can ask them to compare different product options.
For example, if a software company offers 3 different plans:
Basic – Essential features for ₹299 per month
Standard – Essential features + Automation for ₹599 per month
Premium – Advanced reporting + Team Collaboration for ₹999 per month
By analysing the responses you can understand what features customers are looking for.
Conjoint analysis can be more complex. You need to design a detailed survey and get enough relevant responses. This is best for decisions relating to product bundles, subscription tiers and multiple features.
Which Pricing Research Method Should I Use?
Method | Best for | Limitations |
|---|---|---|
Willingness to Pay Question | Early price research | Vague responses |
Van Westendorp | Understand what price range customers would find acceptable | Does not measure demand |
Gabor Granger | Compare specific price points | Cannot compare product trade-offs |
Conjoint analysis | Price product bundles and feature based plans | More complex |
If you are a small business and looking to price your first product it may be best to start with a Willingness to Pay Question or Van Westendorp. If you already have a few prices to look at then Gabor Granger may be best. If you are looking at what features to include in different plans then Conjoint Analysis may give more useful insights.
You can also use a combination of methods if you need multiple pieces of evidence.
Who Should I Survey?
The quality of your pricing research will depend on who you survey. Even with well written questions you may get misleading responses if you don’t target the right customers.
Consider surveying:
Potential customers – Customers that match your target audience and have a genuine need for the product. Can help estimate demand.
Current customers – Existing customers can tell you what they value and how they feel about the current price. This can be useful if you are looking to increase the price or add a new subscription.
Free or non-paying customers – Can help you identify why they aren’t upgrading. Is it down to price, missing features, product limitations or something else?
Customers that chose a competitor – Can help you understand what they expect from other products and what would make them consider switching.
Don’t just target your friends, colleagues and fans. They may not represent the general market. If you are targeting different customer types then analyse responses separately.
How Many Responses Should I Get?
There is no set number of responses you should get for any Willingness to Pay research. It will depend on your target audience, research method, confidence level and if you want to compare customer segments.
A good starting point could be to get around 100 responses however this shouldn’t be taken as a statistical guarantee. A smaller survey can help you identify trends but for a more official pricing decision you may want to get more responses from well targeted customers.
If you are looking to compare 3 different customer segments then you will need enough responses from each group. 100 responses may not be enough.
Try to target the right buyers.
Willingness to Pay Survey Questions Template
Your pricing survey should be short, specific and easy to understand. Start by giving some background on what the product does, who it is for and what the customer gets.
You can adjust the following questions to suit your product/service/subscription.
Background questions
How often do you currently use a product/service like this?
What do you currently use to solve this problem?
Which feature/benefit would be most important to you?
Pricing questions
At what price would you feel it is too cheap and you wouldn’t believe its quality?
At what price would you feel it is a good deal?
At what price would you feel it is getting expensive but still worth considering?
At what price would you feel it is too expensive?
Purchase intent questions
How likely would you be to purchase this product for ₹[price] per month?
What would make you pay more for this product?
Is there anything that would stop you from purchasing at the price you selected?
You don’t need to use all of these questions. Pick the ones that suit your research method.
Avoid leading questions like ‘Would you be willing to pay ₹999 for this amazing product?’ This will encourage a certain response. Be neutral and specific with the currency, pricing and features.
How to Run a Willingness to Pay Survey
By following a set process you can get useful responses.
1. Know what you want to find out
Start by knowing what you want to find out. Are you looking to set a launch price, increase the price, test a premium plan or compare product bundles? Having a clear goal will help you pick the right method.
2. Describe your product
Write a short description of what the product is, what the main benefits are and what is included. This will help ensure everyone is evaluating the same offer.
3. Decide on your research method
Use Van Westendorp to understand what price range customers would find acceptable. Use Gabor Granger to test specific prices. Use Conjoint Analysis to understand how customers feel about different features and prices.
4. Target the right audience
Decide who is most likely to purchase the product. Add in relevant filters such as business size, role, current product usage and who purchases.
5. Write your pricing survey
Keep your questions clear and neutral. Keep the survey short and start with some background information on your product.
6. Test your survey
Ask a small group to complete it. Ensure the questions are easy to understand, the currency is consistent and it works on mobile devices.
7. Send out your survey
Send it out via email, customer communities, invites on your website and in-app messages. Choose the best channels to reach real and potential buyers. Give yourself a reasonable time frame and politely remind people.
8. Analyse your responses
Remove any incomplete or obviously inconsistent responses. Compare responses from different customer segments.
9. Make a decision and test
Use your findings, costs, competitor positioning and business goals to make a decision. Test the chosen price with real customers.
How to Analyse Willingness to Pay Survey Responses
Once you have got your responses you need to understand what they mean.
Van Westendorp
Plot the 4 price responses on a chart as cumulative curves. This will help identify key price points. You can see what price range customers would find acceptable. It can also show common reference points such as the Point of Marginal Cheapness and Point of Marginal Expensiveness.
You can also identify the Optimal Price Point and Indifference Price Point. These are reference points for analysis and will not guarantee you the most profitable price.
The main aim is to understand how customers see price points.
Gabor Granger
Compare the % of purchase intent for each price.
For example, if the survey gave the following results:
Monthly price | Purchase Intent | Estimated revenue for 100 responses |
|---|---|---|
₹499 | 70% | ₹34,930 |
₹699 | 55% | ₹38,445 |
₹899 | 40% | ₹35,960 |
This is calculated by multiplying the price by the number of likely buyers out of 100. In this example ₹699 generates the most revenue.
This is just an example. Actual revenue will depend on how customers convert, how much they cost to acquire, how well they are retained, any discounts etc. Purchase intent will not guarantee sales.
Customer Segments
Look at responses from different customer segments.
For example, small businesses may prefer a lower monthly subscription whereas enterprise customers may be willing to pay more for added security, support and advanced reporting.
This can help you understand if one price would be suitable for everyone or if different plans would be better.
Real Life examples
Here are 3 examples of how businesses can use pricing research.
Example 1 – SaaS Startup
Meera’s project management app team ran a Van Westendorp survey on 150 relevant potential buyers. The responses suggested many would feel it was a good deal at ₹499. However, anything over ₹1,299 started to cause more resistance.
They decided to start at ₹799. As the survey didn’t guarantee they had found the perfect price they tested the offer with a small group of customers and monitored sign-ups.
Example 2 – Online Educator
An online educator was looking to price their course at either ₹4,999 or ₹7,999. They ran a Gabor Granger survey to understand how interested customers would be in purchasing at these prices.
The results suggested the higher price may generate more revenue despite fewer buyers. They also looked at the content of the course and how valuable it was.
Example 3 – Subscription Box
A subscription box company wanted to add a premium plan. Using conjoint style research they realised customers valued quicker delivery over extra items.
They used this information to create a premium option based on delivery speed.
These are just examples. Results will vary depending on what you are selling, who your audience is, competition and market.
Common Mistakes to Avoid When Conducting a Willingness to Pay Survey
A well thought out willingness to pay questionnaire can result in misleading data.
Ambiguous Questions
Your respondents need to know exactly what they are paying for. Be very specific with your questions and explain what product they’re paying for, what features, how they’ll be billed and any additional benefits.
Wrong Audience
If you’re asking the wrong people you could get inaccurate data.
Too Many Open-ended Questions
Having just one open-ended question will give you a general idea but is unlikely to give you enough context to make a big decision around pricing.
Ignore Customer Segments
Different segments may have different needs, budgets and expectations. Break down your research into the relevant segments.
Assume Customers Will Pay
While the survey shows what people say they’d be willing to pay, you should validate any important decisions using real data.
Too Many Questions
Too many questions can cause people to rush through them or answer them incorrectly. Only ask questions that are relevant to your research aim.
Don’t Take Costs or Competition Into Account
Just because customers say they’d be happy to pay a certain amount, doesn’t mean it’s profitable. Think about the cost of the product, margins, competition and alternatives.
Don’t Review the Data
Customer expectations and the market can change so it’s important to review your pricing if there have been any significant changes to your product, audience, costs or competition.
How to Choose the Right Tool for Your Willingness to Pay Survey
Finding the right survey tool will help you create your questions, target the right audience and organise your data effectively.
Look for a tool that offers a variety of question types such as multiple choice, ratings and open-ended questions. Logic can also be set up to show the right follow-up questions based on previous answers.
Ensure the tool has options to manage responses, export data, analyse and integrate with any tools you currently use. This can help you easily review pricing feedback and share your findings with decision makers.
There are many different options of online form builder tools. If you want to integrate your survey responses with your current processes it may be beneficial to look at the form integration options.
Using a tool like Ovoform will allow you to create and share your pricing questionnaire however it is important to ensure you choose a tool that can support your research.
Final Thoughts
A willingness to pay survey can help a business better understand how customers view the price of your product. It can help you determine what price range customers are happy to pay, compare individual prices and understand what features are valued.
However, you should never solely base your pricing decisions on the results. The most effective research will consider customer feedback, product costs, competition, business aims and real purchasing behaviour.
Set a clear question, choose the right method of researching pricing and ask those who are most likely to purchase your product. Break down your data by customer segments and test your pricing.
Once you understand what your customers are willing to pay and why they value your product, you can confidently create a pricing strategy.
