A US-based credit card company wanted to arrive at the correct price for the payment protection benefits provided with its small business cards. Being a relatively smaller player, in terms of market share a precise price assessment was critical to the success of its product. The company turned to AbsolutData to assess the price sensitivity levels for payment protection benefits and pave the way for better informed pricing decisions.

• We began by conducting an online survey targeted at owners/key financial decision makers of small businesses. We got 309 respondents to complete the survey. After that we carefully weeded out those who didn’t meet the specified screening criteria.
• Next up, we developed and applied the Price Sensitivity Measurement (PSM) technique to help us assess the appropriate price range in which to deliver the payment protection benefits. PSM is a technique based on respondents’ answers to the following price-related questions: At what price would it be so cheap that quality is doubted? (Too inexpensive)At what price would you consider this product to be a bargain – a great value for money? (Inexpensive)
  At what price would it start to get expensive, but still worth considering? (Expensive)
  At what price is it so expensive that it would not be considered at all?(Too Expensive)
  • After accounting for response bias, we were able to establish a range of prices within which pricing strategies could be applied. The analysis covered the full range of pricing possibilities by identifying areas of price elasticity/inelasticity and the optimal price curve.
  • To further add value, we analyzed the responses to highlight the Unique Target Point—the price at which each individual was very likely to buy the product. We also analyzed the survey responses to come up with a ranking of each of the payment protection benefits, in terms of their relative importance.

• We were able to determine the price at which the market share of the product could be maximized.
• Among the 17 benefits listed in the survey, we identified those that were the most important to the respondents.
• We could present to the client a clear picture of the optimum price -benefit combination that could be designed to deliver the maximum market share.