A client from the financial services industry wanted us to determine the ideal price model for transnational peer-to-peer money transactions. The new price model had to be optimized to drive usage and win share from competitors while at the same time increasing profitability. This objective had to consider the wide range of transaction amounts that are sent internationally. Furthermore, they were looking to optimize price display considering several fee components. The research question required a custom conjoint experiment in order to derive the optimal pricing strategy for our client.
In order to create a realistic choice experiment we opted for a holistic approach with extensive pretesting. This included three steps:
1) competitor research and user experience analyses in all markets to get a profound understanding of the competitive situation.
2) a live cognitive pretesting of the online survey to make sure that the trade-off experiment was fully understood by respondents and covered all relevant aspects they cared about.
3) a CBC exercise (Conjoint) to identify the ideal pricing options that maximize simulated share and revenue from fees. Different ways of displaying fee components were tested considering principles from price psychology.
The client introduced a new pricing structure that considered simulated outcomes of our study to realize new revenue streams while minimizing loss of existing revenue streams and market share.
Insights from behavioral economics on ideal presentation of fees guided decisions on displaying of prices and fee components.