This article describes how to use the Gabor-Granger method to determine price for a new product or service.
A survey which asks respondents how likely they are to purchase an item at a particular price. For example, on a scale from 1 to 5, how likely they are to pay $1, $2, $3, $4, and $5 for a product.
Step 1: Combine existing variables into a single variable set
- Select the variables you want to combine.
- In the toolbar select Combine > As Variable Set > Do Not Merge Variables.
- Click Proceed Regardless if prompted. You'll get a new combined variable set.
- With the new variable set selected, under GENERAL > Structure select Binary - Multi: non-mutually exclusive categories
- Click Fix.
- Make sure "Yes" is checked, then click OK. At this stage you may want to simplify the labels for each price point and reduce them down to the $ value only.
Step 2: Create a table of this variable set and then change it to a line chart visualization
There are several ways to work out the total amount of revenue from each option. For example, doing it by variables or by creating an output, and multiplying by the $ value in an R calculation. In this article, we've taken the latter approach.
- Drag the variable set from above onto the Page to create a table.
- Under Inputs > STATISTICS > Cells make sure to select only Count (deselect any others).
- In the toolbar select Hide to make sure this output doesn't get published later.
- Note the Properties > GENERAL > Name of the output as you'll need that below. In my example, it's table.Q.
- In the toolbar select Calculation > Custom Code.
- In the R CODE field paste in the code below. It simply takes the count of each dollar value selected and multiplies it by the actual dollar value to give you the total sum for each. Note that the order of things is important here, i.e. that the rows in the table should be in the same order as the dollar values on the first line of the code.
dollarvals <- c(3.5, 3, 2.5, 2, 1.5)7. Click Calculate.
table.Q.3[!rownames(table.Q.3) %in% c("NET")] * dollarvals
Step 3: Change this table into a line chart
- Under Inputs > OUTPUT > Visualization.
- In the Visualization Selector choose Line > Line.