During a time of uncertainty, consumer spending and buying behaviors tend to shift rapidly. What used to be the "right" pricing a year ago is no longer applicable. With society facing supply chain, inflationary, and recessionary issues, companies need to be spot on with effective pricing strategies that meet their demand requirements.
A Specialty Home Retailer wanted to know if they could increase prices by 20% on their top-performing products within four product categories without altering the demand for set products.
First Insight tested each product category. Items were tested at their desired price increase (20% more) targeting their current customer. InsightPRICING was used to adjust test price back down to current price to be able to compare demand at full price of current price vs increased price.
InsightPricing results showed that for a higher-priced product the customer is more resistant to price changes.
The brand noticed a significant decrease in demand for their coffee tables and sofas at the new 20% increase in the ticket price.
Knowing that items are promoted 15% off occasionally, the company used InsightPRICING to look at how demand would change if the new ticket price went into effect but then during the year the items were promoted at 15%. Results showed that change in demand at a 15% higher new price point was much lower. The furniture brand moved forward with the 20% ticket price increase and used a 15% promotion as needed throughout the year.
This Specialty Home Retailer was able to achieve a net 5% increase in initial price by testing its product categories with First Insight's retail price optimization software.