💰Price Test Use Cases

The goal of price testing is to find a product's optimal price point for maximum revenue.

Should I Price my Products Higher or Lower?

The most basic question you might want to answer with A/B testing is if you can:

1. Increase the price without hurting demand

2. Decrease the price and increase enough sales volume to profit.

You can simply run a price test by increasing and decreasing a product's price by a certain amount or percentage to verify this.

Example Scenario

	Product A
Control Price	$ 100
Test Price 1 (-10%)	$ 90
Test Price 2 (+10%)	$ 110

Potential Outcomes and Actions

The main metric to focus on is the Revenue and Conversion Rate (CVR). Consider choosing the price point with the highest Revenue. You can also observe how change in price will influence the amount of add to carts, checkouts and orders.

If you do not see a clear change in CVR, this might mean that customers are less price sensitive to your product. Thus, you can try experimenting with larger price changes. For instance (+- 30%).

Should I Match my Competitor's Price?

If your product is entering a competitive marketspace, you can research the competing product's price. After understanding competitor prices, run a price test to experiment with:

1. Pricing above competitors to aim for a higher profit margin.

2. Pricing below competitors to aim for capturing more market share.

3. Price matching competitors to defend market share or build brand awareness.

Example Scenario

You have 2 main competitors who prices their products at $100 and $120. You want to test if you can capture more market share by pricing lower or matching competitors.

	Product A
Control Price	$ 80
Test Price 1	$ 100
Test Price 2	$ 120

Potential Outcomes and Actions

The main metric to reference for decision making is Conversion Rate. Additionally, monitoring the Average Order Value and Profit per Visitor can provide insights into the financial impact of each pricing strategy, allowing you to balance market share and profitability.

Price Anchoring

By setting up different "compare at" prices, you can test if displaying a higher anchoring price point alongside the actual price will influence consumers' perceived value to increase conversion.

Example Scenario

You want to see if a higher "compare at price" will also bring higher Order %. Also, you want to find a balance where the "compare at price" is high enough to create perceived value but not so high that it appears unreasonable or deceptive.

Product Price	$ 100
Control Compare at Price	$ 120
Test Compare at Price	$ 150

Potential Outcomes and Actions

The main metric to reference for decision making is Conversion Rate (Order %) .

• If a higher "compare at price" increased Order %, consider adjusting to the test price.

• If a higher "compare at price" decreases Order %, it may be perceived as unreasonable. Lower the anchor to align better with customer expectations and market standards.

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Remember to run price tests for a sufficient duration to gather statistically significant data. ABConvert recommends a minimum of 10,000 views in total and 200 orders across all test groups for reliable results. Always consider the broader impact of price changes on customer perception, brand positioning, and overall business strategy.