If you're trying to figure out the optimal price to set for your product or service, the VanKonan test (also known as a price optimization model) is a great solution for your needs. Also find out the price range your current or future customers would find acceptable, as well as how to optimize pricing for maximum revenue, profit, or frequency of sales. This model includes the van Westendorp test. Learn more at https://aytm.com
Partial transcript, more info available at aytm.com:
Hi, and welcome to the AYTM.com VanKonan Price Optimization tutorial video!
The Price Optimization Model, or POM, is also known as VanKonan. It’s named after AYTM’s data scientist, Ivan Konanykhin, who helped develop the model. It’s a very efficient way to get clarity on vital business questions. It can handle a wide range of business models from consumer packaged goods to SaaS businesses and service companies. Like other AYTM advanced research tests, VanKonan is designed to be so easy to set up and interpret that it doesn’t require any research training whatsoever. All you need is an overall understanding of your business’s objectives and market realities to set it in motion. Based on a few easy-to-answer questions that the model will generate, your survey will gather enough information to connect all the dots, analyze the dependencies, and output a sophisticated prediction of acceptable price ranges and optimal price points for such fundamental business goals as maximizing revenue, profit, and/or frequency of sales. What’s more, results will be presented with automatically generated executive summary findings and interactive charts, allowing clients to run unlimited ‘what if’ scenarios post-fielding.
The VanKonan model incorporates the VanWestendorp price sensitivity meter as a starting point. If you’re not familiar with the VanWestendorp model, it asks each respondent four very specifically-worded questions about the price, starting from “At which point would you consider the price to be so cheap that you would think it couldn't be a quality product” all the way through “...so expensive that you wouldn't consider purchasing it.” Respondents are prompted to enter a numeric value in each field, but custom validation on this question will not allow them to advance to the next question unless each value they enter is greater than the one above it, to maintain the logic of the methodology. This secures more thoughtful answers, and prevents illogical completes (which would reduce your usable sample size). Based on the collected answers, VanWestendorp will report what the customers' expectations of the price will be, graphically plotting four to six curves to identify the optimal price point and acceptable price range. The limitation of this test is that it doesn’t take into consideration such vital business realities as likelihood of purchase, total addressable market, cost of goods, or frequency of purchase, making the findings only somewhat representative of consumers’ desired price. VanWestendorp often reports a price that is divorced from profitability and lower than what consumers would be willing to pay in real life, provided that the quality, distribution, marketing, competitive positioning, et cetera, are favorable and well-executed.
Our VanKonan research test goes well beyond the VanWestendorp test, and addresses these issues. With the addition of a couple easy-to-answer questions, it measures the probability and frequency of purchase at each of the key price points. Coupled with the information you enter into the model, such as your total addressable market, estimated retail price, and the cost of goods, VanKonan fills in all the remaining pieces of the puzzle to build a comprehensive and flexible model which l’ll show in a bit.
VanKonan is very sensitive to the number of survey completes, so we recommend ordering 650-1,000 responses; we can't launch it with fewer than 400 responses ordered. We recommend using it as a second-stage price study, after you have figured out your target audience and total addressable market, and followed by a more precise and expensive price methodology, such as a monadic price test or qualitative research.
Let me show you how to set up a VanKonan study. First, choose what you would like to optimize the price for. You have four options here:
1. Run Price Sensitivity only (which is the VanWestendorp)
2. Add the Maximum Sales Frequency Price Optimization module
3. Add the Maximum Revenue Price Optimization module
4. Add the Maximum Profit Price Optimization module
The fourth option gives you an all-inclusive VanKonan package. Each module adds a bit to the cost of the study, allowing you to do as much or as little as you need and as fits your budget....
Learn more at https://aytm.com.