Testing price sensitivity of your product

Testing price sensitivity of your product

Some of our competitors sell at significantly lower prices than us, whilst others have taken our prices as their benchmark. We needed to understand whether our product is price sensitive and if so, to what extent. That would enable us to decide whether to sell a bare bones product at the lowest price that we would be interested in, or whether to continue selling a product rich in extras, but at a higher price.

You might have the same problem, so this is how we tackled it.

Firstly, we decided on our lowest price. In our case, we could take into account the fact that when we sell a company online, we also have the possibility of selling other products, like tax, bookkeeping and company secretarial services to the same client. So we might wish to treat the original sale as a loss leader. We decided that first off we would ignore the possibility of further business, that could be tested later.

Next, we found an excuse to hold a special offer sale. A sale allows you to drop your prices in the short term, but with no commitment to keeping them at that low level. We decided on a "New Year Special Offer".

We ended the year with plenty of 2018 companies in stock, some of which we need to preserve for ageing, but the rest could go on sale.

Our 2018 price for a shelf company was R1 980, so we decided that the special offer price would be R1 500.

Every marketing resource, including social media, is being employed to ensure that the sale comes to the attention of the widest audience.

We will assess the outcome at the end of January and I will post our findings.

Our findings 4 February 2019

We reckon that every company that we sold could have been sold at full price as only one client mention the special offer. In every other case it was us who mentioned it.

Conclusion - our product is relatively price insensitive, but yours may not be.

Click here
 to buy a company from us, click here to buy a Trust from us or click here to get absolutely FREE, ONGOING business and Trust coaching, and tax advice from our CEO, Derek Springett Pr(Eng); CA(SA); Registered Auditor.


South African Institute of Chartered Accountants. Designation CA(SA)  Internationally Accredited Financial MediatorsIndependent Regulatory Board for Auditors. Designation RA<Engineering Council of South Africa. Designation Pr(Eng) Member of MENSA, the High IQ Society




Find Us Here

Address: 1st floor, Gallagher School Building, 537 Lupton Drive, Midrand, Gauteng