Testing Willingness to Pay for a New Service with Two Potential Payment Models
Challenge
Our client is a software company offering a range of cloud-based business applications. They are planning to launch a new service for enterprise customers. While the product package is already determined, there is some uncertainty as to the best monetization approach: a subscription model is one option and a consumption-based charge is the alternative. An online survey with potential buyers shall determine the best payment model and the optimum price point.
The GLG Approach
We surveyed n=250 IT directors and senior managers in US companies with over 500 employees. All respondents owned a portion of their company’s technology budget and had influenced the purchase of technology solutions over the past 12 months.
As part of the survey, we conducted a Price CheX exercise, where respondents repeatedly chose between products at systematically varying prices. Based on these choices, we built a pricing simulator for the client team to create what-if scenarios.
Outcome
Simulation results revealed a strong interest in the new service, in particular when offered as a subscription. We could show that the offer is competitive even if priced higher than competitor products today. The simulator also allowed users to simulate customer preference at other competitor price points, which proved most useful as prices did change after the study was conducted.
Why GLG?
Project Breadth
Sample of 250 IT decision makers in large and mid-sized US companies.
End-to-End Support
In collaboration with the client team, GLG methodology experts designed a survey questionnaire with experimental choice questions. Key findings have been presented in a web meeting to a group of client stakeholders.
Let us start helping you today
As the World’s Insight Network, GLG connects clients to the subject-matter experts who can provide real-world insights to make informed decisions. Our team of professionals work with you to create a tailored approach that identifies, assesses, and answers your questions on your timeline. We bring the power of insight to every great professional decision.