Gabor-Granger analysis. Calculate the optimal price to maximise your revenue.

The Gabor-Granger analysis is, together with the Van Westendorp analysis, one of the most common market research techniques to determine the optimal price of a product or service. Whenever you want to price a new product, validate a current price or evaluate different price change alternatives, the Gabor-Granger analysis is an indispensable tool. Find out all the details today to set up your own Gabor-Granger surveys.

How does the Gabor-Granger analysis work?

The Gabor-Granger method is based on consumers’ perception of value. It calculates how demand varies at different price points. The Gabor-Granger analysis is carried out through a survey, where respondents are presented with different potential prices for a product or service and asked their willingness to buy in each case. The typical process includes the following steps:

• Price definition: a range of relevant prices for the product or service is selected.
• Consumer survey: participants are asked, for each price in the range, whether they would be willing to buy the product/service at that price. For example: Would you buy this product if it cost 10 Euros? What if it cost 15 Euros? What if it cost 20 Euros?
• Data analysis: the proportion of respondents who would be willing to buy at each price is calculated. This generates a demand curve showing how willingness to buy changes as the price increases.
• Identifying the optimal price: this is determined by balancing consumers’ maximum willingness to buy with the revenue that could be generated at each price point.

As you can see, the Gabor-Granger analysis is very simple to implement and understand and provides very clear data on the relationship between price and demand. Critics argue that statements about willingness to pay a certain price in a survey may not be a true reflection of a real buying situation where you are actually going to part with that money and you can see the prices of similar competing products that may alter your buying decisions. to reduce this effect, what is usually done is to show the typical prices of different products in the market so that the consumer can assess the price of the product under study in a competitive situation.

Another way to get a better picture of the optimal price is to combine the Gabor-Granger method and the Van Westendorp analysis. By using a different methodology, it provides a complementary point of view that can be used to confirm or modulate the result of the Gabor-Granger survey.

Gabor Granger analysis with We are testers

Conducting a Gabor-Granger analysis is possible with the We are testers research platform. Simply create the questionnaire and select the sample on which you want to conduct the research. Moreover, the We are testers team of research experts will accompany you through the whole process.

Interested in Gabor-Granger analysis and optimal pricing? Ask our experts about the best ways to get your answers.