Use the BPTO method to determine prices

1. Define the specific pricing questions you are trying to answer by doing a Brand-Price Trade Off analysis.

Common questions companies are trying to answer with a BPTO analysis are: How will repricing an existing product impact market volume, revenue, and profitability? How will launching a new product at a specific price point impact market volume, revenue, and profitability? Will launching a new product cannibalize existing product sales or steal market share from competitors? Will the market pay a premium for your brand relative to competitors? What pricing strategy makes the most sense for your brand positioning and market to increase market share, revenue, or profit? What is the maximum price your brand can charge before losing market share? When considering purchasing this type of product or service, what is the relative influence of brand and price on the market? What is the impact of awareness and advertising on new product adoption?

2. Check that the product you intend to study is a good candidate for a BPTO analysis.

BPTO works best when the following conditions are true: It is a consumer good in a category, such as durable goods, cosmetics, alcohol, or over-the-counter medicines. You are only looking at price points and SKUs, not features. The scale of price points is consistent. For example, compare gallons vs. gallons instead of gallons vs. ounces. Your product has at least three current similar competitor products.

3. Choose which outputs from the study you will use to understand willingness to pay, price elasticity, and relative influence of price and brand on decision making.

Outputs you may wish to analyze include: Volume share simulation, when looking at new product launches. Price elasticity, when trying to understand how the price of a new product will impact market volume or revenue. Price barriers. Price sensitivity differences by SKU/brand. Result of exposure to advertising. Differences in consumer behavior types. For example, consider user vs. consider behaviors. Each respondent’s individual differences in price sensitivity.

4. Design a survey that simultaneously displays 3-5 branded products and their prices, and asks respondents which offer, in a hypothetical buying scenario, appeals most.

Include None of these as an option. The price shown for each brand can be determined by being: Shown at the same base level, with the price of the selected brand increasing by one increment each time it is selected until another brand is chosen. Randomly varied from within a range of values, having respondents give feedback on randomly generated brand and price combinations over many iterations.

5. Set up your survey and respondents in an online survey tool, such as SurveyMonkey.

SurveyMonkey offers both a free plan and the ability to buy targeted respondents, giving you the ability to increase your number of respondents, if necessary. Other online survey tool options include: Qualtrics Alchemer Zoho Survey SoGoSurvey In SurveyMonkey, click on Create Survey to begin creating your survey from a template or from scratch. Add the questions you designed, in your preferred sequence. Upgrade to a paid plan to brand your survey with additional design customization options.

6. Preview and test your survey for comprehension, logic and flow, appropriateness, length and adherence, technical quality, and introduction and gaining consent.

7. Send an invitation to your survey to enough people to generate 300 respondents. Include a link and use multiple channels, such as email, social media, and text.

Use sources such as people from your own network, volunteers from another company, connections on LinkedIn, past research participants, conference attendees, paid respondents from SurveyMonkey Audience, or paid survey services to get respondents.

8. Enter the raw output data into a spreadsheet to cross-tabulate and filter your results, determine a price point to model, and model the projected impact of that price point.