Price Magic: The Prompts to Double Your Profits

Read time: 3 mins

Why Are You Here?

Welcome aboard the Cyborg Marketer voyage once again, where we navigate the waves of e-commerce with savvy and a bit of AI-powered swashbuckling 🚀

In today’s issue:

• We're zeroing in on pricing strategy: Ever wondered if you’re underpricing your products? The Van Westendorp method is here to find out and unearth those hidden profits.

Ready to crack this concept with AI? Let’s dive in.

Decoding the Price Puzzle

In this rollercoaster economy, getting your pricing spot-on can feel like a wild guess.

"Am I leaving money on the table?"

This might be the million-dollar question keeping you up at night. And you know what? It's a common puzzle across the seven seas of business.

Let me share a quick story: I'm a major fan of Ian Bernard from Creative Business Company. I read their newsletter on increasing profits during a recession, and it really got me thinking.

They uncovered that a whopping 80% of marketers were undercharging their services through a Van Westendorp survey.

Talk about an eye-opener!

But this isn't just about marketing; it's a common tale of missed pricing opportunities.

Enter the Van Westendorp Price Sensitivity Meter – your secret weapon against undervaluation. It's simple yet brilliant, using just four questions to unlock your product's true worth:

The Four Pillars of Van Westendorp

Picture this: Just four questions stand between you and your ideal price:

1. "At what price would you doubt this product's quality?" (Too Cheap)

2. "What's your 'this is a steal' price?" (Cheap/Good Value)

3. "At what price does this start feeling like a splurge, but you'd still consider it?" (Expensive/Still Consider Buying)

4. "What's your 'no way' price?" (Too Expensive)

Each of these questions serves as a beacon, helping to pinpoint:

• Point of Marginal Cheapness (PMC): Go below, and you're in the 'too cheap to be good' zone.

• Point of Marginal Expensiveness (PME): Cross this, and you've hit the 'too pricey' ceiling.

• Optimal Price Point (OPP): Your pricing sweet spot where value and affordability meet.

• Indifference Price Point (IPP): The equilibrium where 'cheap' and 'expensive' perceptions balance out.

This requires us to run a survey and analyze the data, and guess what? AI's here to help us with both.

ChatGPT Brainstorm

First up, creating the survey. We'll guide responses towards values ending in five or zero for simplicity. Think of it like setting the stage for easy, intuitive answers.

ASSISTANT: Act as an experienced market researcher specializing in price sensitivity analysis, adept at creating Van Westendorp surveys for businesses seeking to understand customer pricing perceptions.CONTEXT: The survey aims to gather insights from existing customers about their price perceptions. These customers are already familiar with the product, so the focus is on capturing accurate pricing information.TASK:1. Collect Survey Parameters: Prompt me to provide details about the product, its target market, and any specific pricing concerns or objectives.2. Acknowledgment of Customer Familiarity: Start with a brief acknowledgment that respondents are existing customers familiar with the product.3. Survey Question Construction: Generate the four standard Van Westendorp questions, tailored to solicit clear and precise pricing perceptions from these customers.4. Simplified Pricing Instruction: In the introduction, explain that responses should reflect typical retail prices, generally ending in 0 or 5. Avoid repeating this instruction in each question, but include a subtle reminder.5. Survey Format and Delivery: Create a structured, concise format for the survey, suitable for an audience already familiar with the product. Ensure the survey is easy to complete and respectful of the respondents' time.FORMAT: Output a ready-to-use Van Westendorp survey, formatted for immediate distribution. The survey should include:- A brief acknowledgment of the respondents' familiarity with the product.- The four Van Westendorp pricing questions, each followed by a subtle reminder for price formatting (e.g., “(price ending in 0 or 5)”) rather than full instructions.- A closing statement thanking the respondents for their time and valuable input.

Here’s the dummy brand I used:

Ask your customers to fill in the survey. You can use platforms like Google Forms, SurveyMonkey, or Typeform.

Your finished survey should look something like this:

And after you've gathered those responses, let's analyze the data.

Here’s the prompt to transform numbers into actionable strategies.

(When you’re asked to input the data, you can either drop the CSV directly into the chat or copy and paste the entire table, but I recommend the CSV method):

ASSISTANT: Act as an expert data analyst with a deep understanding of market dynamics and consumer psychology. Your analysis should be thorough, focusing on delivering actionable insights.CONTEXT: Users require detailed and actionable insights from their Van Westendorp survey data to inform their pricing strategies. The analysis should align with the current market context and reflect logical and data-driven decision-making.TASK:1. Input Data: Prompt the user to input their Van Westendorp survey data, ensuring it's comprehensive and relevant.2. Data Analysis:- Analyze the data to identify the four key price points: Point of Marginal Cheapness (PMC), Point of Marginal Expensiveness (PME), Range of Acceptable Pricing (RAPP), and the Optimal Price Point (OPP).- List each price point clearly with a brief explanation of its significance.3. Cross-Check and Validate Findings:- Compare the identified price points against the current product pricing.- Ensure that recommendations for price adjustments are logically consistent with the data findings and the current pricing context.4. Filter Out Nonsensical Responses: Exclude any survey responses that do not fit the expected logical pattern (e.g., 'Cheap' higher than 'Expensive').5. Strategic Recommendations:- Provide a detailed pricing strategy based on the OPP and other identified price points.- Include considerations for increasing pricing where applicable, with a focus on enhancing profits while minimizing potential loss in volume.- Offer a step-by-step price adjustment strategy, starting from the current price towards the RAPP and eventually the OPP, if applicable.- Discuss the long-term pricing strategy in the context of market positioning and consumer perception.FORMAT: Deliver a comprehensive analysis with the values of key price points (PMC, PME, OPP, RAPP) and relevant insights. The output should maintain logical consistency and be presented in a structured manner, including strategic recommendations covering the current pricing context, price increase potential, price adjustment strategy, and long-term pricing strategy.

And here’s the output with survey data I generated for Zenith Homeware:

Why This Hits Home

The analysis balances the need for profitability with market dynamics and customer perceptions. This approach ensures the brand doesn’t swing too far towards profit at the expense of customer loyalty or vice versa.

But there we have it. According to the analysis, this brand clearly has room to increase its prices.

The Bottom Line

Pricing is part art, part science. Van Westendorp might sound like a fancy barista's name, but in our world, it's the espresso shot your pricing strategy needs.

With Van Westendorp, you're wielding a tool that demystifies customer perceptions, empowering you to increase prices, not just with confidence but with precision.

So, ask yourself, are you really tapping into the full potential of your pricing strategy?

Or are you leaving undiscovered treasures buried under conservative estimates?

Perform that survey and run the prompts to find out! I’d love to hear about your results too, so share your experiences in a reply.

Until our next adventure,

— Gold

(Follow me on Twitter/X)