Buying a new car? Then take a test drive. Buying new shoes? Then try them on. Painting a house? Then put up samples to see what color looks best. As consumers, we are hardwired to seek experiential input when making decisions. Unfortunately, that common sense approach is often overlooked when it comes to making certain business decisions.
Despite the critical role price plays in business performance, key price decisions often are made on gut instinct. However, wouldn’t it be nice if there were a way to try out that innovative pricing strategy before you firmly commit? You can…because price testing allows you to do just that!
There are benefits to conducting price testing that will enhance your future business decisions. Most of these benefits when implemented within an organization, illustrate the importance of price testing:
- Validating the Pricing Strategy: An innovative pricing strategy that “looks good on paper” but lacks real-world validation is the perfect candidate for price testing. Executed correctly, price testing can validate the presence of the opportunity and quantify its actual benefit potential.
- Minimizing the Risk: Price testing is especially critical when considering a significant pricing strategy shift. Testing a different approach on a subset of the business before embarking on a large-scale rollout is a low-risk way to stress test the pricing strategy before committing to it.
- Gaining Buy-In: No matter how promising a fresh pricing strategy may seem, in the absence of hard proof there will always be pessimists. What better way to win them over than by conducting price testing that scientifically proves the merits of the innovative pricing strategy.
- Driving Continual Improvement: In today’s business environment, what works best today may be suboptimal tomorrow. Price testing and refining your pricing strategy consistently is the best way to proactively achieve sustainable pricing results.
So the next time you plan to update your pricing strategy, just remember the “try before you buy” price testing approach to price decision making. Putting this plan in place to test the pricing strategy is essential before fully committing and implementing it.