Research Trail Guide: Price research #1 – the pricing piano

This article is about product pricing, pianos and pancakes. I know what you’re thinking: what do pianos have to do with pricing? Are we just out here buying pianos now?

I’ve recently been thinking about how qualitative research can support decisions on what price to charge for products and services. Interviews don’t replace quantitative studies and product experiments, but they add useful context around how customers think about price – which you don’t get from a survey (or when someone doesn’t click ‘buy’ on your site).

What's a pricing piano?

A ‘pricing piano’ is a tool for analysing different price points in a market category. It’s mainly used by consumer brands to analyse market share at different price points and look for patterns and gaps. The peaks and gaps of the graph make it look a bit like a piano. 

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Image from here, more examples here, these FMCG folks are on it!

Well, I’ve adapted the analogy to work with qualitative interviews. I’ve put together a useful exercise where research participants map out the prices of alternative things they buy. It’s probably not safe to call it a pricing piano in front of an FMCG price specialist, so let’s hope they don’t see this post!

How to do it yourself

You can do this in an interview with paper or a digital whiteboard, here are the steps:

1. Build an X axis where all the price points will go
2. Have a Y axis that represents frequency
3. With the customer, write the names of products/solutions on post its
4. Place them all on the chart together and discuss
5. It could also be a good individual exercise in a focus group, followed by comparison and discussion

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Here are the principles I follow when I do this exercise:

Think broadly about ‘competitors’

We aren’t just comparing cereal brands here folks. We’re analysing the price of solutions for a job to be done, so a banana from home achieves the same (or similar) job as a quick croissant from the cafe.

And this is not a weekend breakfast or a breakfast meeting, which have different budgets and requirements too.

Frequency is important

It’s very rare I spend £11 on breakfast! Probably worth exploring the circumstances when I’d push through to this budget.

What else was going on?

Also interesting to layer on other factors like how much effort was involved with making that breakfast, was I in a hurry that day. It’s likely that time (or the lack of it) has a direct influence on my breakfast spend.

Also I had no idea how much I spend per smoothie. Those green powders add up.

Avoid speculation

This method is based on concrete data, not speculation about what people might do in the future. Try to base it on real purchases in recent memory. Get the receipts out!

What you get at the end

This diagram becomes a tool for understanding a person’s spending behaviour. You can see where thresholds exist and ask about what causes them. You can refer back to it in conversation when positioning your solution. And, across a relatively small number of conversations, you’ll start to see price-centric segments appearing (which you can then explore with quant), for example:

• People who spend money to save time
• People who never spend on breakfast
• People who will spend money to try new foods/flavours
• People who can expense breakfast up to a certain price

It’s not going to give you the exact dollar price for your product/service, but it will show you the bookends.

Let us know if you’d like some help running pricing research for your business. We offer planning workshops as well as full service research projects.

More pricing content coming soon to this blog:

• Willingness to pay! 
• Price based segments
• Benefits ranking

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WAIT, what about B2B?

What about B2B software, like an app that automatically orders tasty breakfasts to morning meetings when they’re added to a calendar?

This exercise is definitely harder when there are fewer alternatives around or you’re building something completely new. But it’s still possible to extract useful information from customer conversations.

Here are a few tips for doing this in B2B:

First try staying inside the problem space

If they are already solving the problem, what are the ways they’re doing it and how much do these cost?

“What are all the ways you organise catering for meetings? Let’s put them on this little diagram I’ve prepared.”

If they aren’t paying to solve the problem, then maybe there isn’t a problem, useful discovery!

Try parallel purchases as a back up

If that doesn’t work, try thinking more broadly about similar products or services they might have bought, and use these as a reference:

E.g. “what are all the food-related perks that you provide to employees and their guests?”, “what have been all the occasions that you brought food into the office over the last month?”

Or even broader “what solutions have you brought in to save time on repetitive admin tasks”

Not everyone will be comfortable sharing prices

But they’ll probably share the names of things, so you can dig out that information later.

You can also get them to stack the items in order of price/spend, which gives you a ranking and feels less intrusive.

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