If your portfolio offers standard products, plus the option to add features or services, it’s important to accurately understand and predict your customer’s willingness to pay for each. How you obtain these consumer insights can mean the difference between a successful revenue management strategy or leaving money on the table.

Whether you’re offering a “build-your-own” wireless data plan, a “good-better-best” option for a consumer durables product or a B2B product with additional configurations, it’s critical you understand:

  • Which value features and services should be included in the standard offer vs. additional?
  • What is the optimal pricing and portfolio strategy to maximize revenue from these additions?
  • How to best predict and influence decision behavior in these complicated scenarios?
SKIM Simulator - Hybrid CBC MBC
SKIM Simulator – Hybrid CBC MBC

To understand how to maximize the profit or revenue per customer when they face so many options, you need to adapt your research approach to a more holistic pricing and portfolio optimization.

Traditional pricing research (e.g. Kano, SKIM Price Explorer, choice-based conjoint, etc.) typically focuses on determining the content and / or price sensitivity of the base offer or the willingness to pay for the value-added services, as two separate exercises. However, if you rely on such an approach for these complicated scenarios, you’ll miss out on the interaction between the standard offer vs. the extra services. And herein lies the opportunity to increase profit and revenue.

We developed our new Hybrid CBC-MBC solution to tackle this research challenge. SKIM’s Hybrid CBC-MBC innovation is a holistic approach combining choice-based-conjoint analysis with menu-based-choice to better understand the price sensitivity and interaction between the standard offer vs. the value-added services.

This results in more accurate and realistic pricing insights for industries that offer base products with the potential to upsell additional features, value-added services or configurations. By understanding the interactions between the offer options, you’ll be armed with a more successful revenue management strategy.

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Joost van Ruitenburg
Joost van Ruitenburg, Director