The Gabor-Granger Method determines the highest price a respondent is willing to pay for a good or service. This pricing method was developed in the 1960's and has been widely used in marketing studies.
How it works
Specify a range of prices and the respondent will be shown a random initial price within this range. If the respondent indicates they would purchase the product for that price they are asked a random higher price within your range. If they would not purchase at that price they are asked a random lower price within your range. This continues until the highest price they are willing to pay within your range is determined, or they indicate they would not purchase at any price in your range.
Example: You set a range of $120.00 - $150.00 with values in $5.00 increments. An interaction with the respondent could be:
- The respondent is asked if they would purchase the product for $140.00. They answer No.
- The respondent is next asked if they would purchase the product for $125.00. They answer Yes.
- The respondent is next asked if they would purchase the product for $135.00. They answer Yes.
The Method completes with a final maximum purchase price of $135.00.
You specify the values to be presented in your range (typically evenly spaced but you may set the values as you wish. Since the presentation moves randomly based on their answers it's unlikely for a respondent to see all options in determining the highest price they are willing to pay.
You determine the number of buttons the respondent is present, two or five. If five buttons are presented the first three are interpreted as the respondent not purchasing and the last two as purchasing at the presented price. You can select between color or white and gray buttons.
. . . .
You add a checkbox question with the possible values to be presented ("0.00" captures respondents who won't pay any procie in your range):
The checkbox question above is used for reporting and will show the fall off of purchasers as the price increases.
You can also view individual responses to see the order and prices they were presented.
How to add the Gabor-Granger Method to your survey
Please contact Support and we will provide an example survey in your account.