Employing The Gabor-Granger Pricing Model To Price Your Latest “Lunettes De Créateurs” Collection

Similarly to the Van Westendorp (VW) Price Sensitivity Model detailed in a previous article, The Gabor-Granger (GG)pricing method is reliable and useful in pricing products that are newly introduced in the market and don’t have any existing competition in the market like unique pieces of designer eyeglasses or “Lunettes De Créateurs”. Like the VW pricing model, the GG pricing model helps measure the elasticity of demand and identify the product’s Optimal Price Point. The GG method includes three steps submitting the survey to a number of respondents, collecting the responses, and analyzing the data.

The first step of the GG model consists of setting the survey by including two sets of questions. The first question consists of asking (after having shown the product and provided ample description and explanation about its features) the respondents whether they are interested in buying the product at all. The second question consists of providing 10 to 15 price levels of the product one at a time depending on the participant’s response to the first provided price level. For example, let’s suppose you set 10 price levels ranging from 10 t 100US Dollars with 10 Dollars increment, and if you asked him/her if he/she is willing to pay 50US Dollars (randomly chosen) for the product and his response was “No” the next price level you suggest would be a randomly chosen lower price level. If he responded “Yes”, the next price you suggest would be a randomly chosen higher price level. You complete the process until you find the higher price each participant in the survey is willing to pay.

The collected data should inform you about the number and percentage of customers interested in buying the price, the number of customers willing to pay the suggested price, and the optimal price point. The graph explaining the Price Elasticity of Demand plots the Percentage of Customers Willing to Pay related to the Price Level. The steeper the line is, the more sensitive the customer’s willingness to pay is. The less steep the line is the more flexible the willingness of the customer is to pay for this product.