“New” risks require a new approach
Companies are exposed to new (cyber) risks due to the increasing use of data and technology. Research shows that organizations – in particular small and medium-sized – are currently not very risk-conscious and often insufficiently protected against these risks. That is why Interpolis developed a new proposition that helps entrepreneurs gain insight in the (cyber) risks they face and possible preventive measures.
Question: what is the optimal price for the new cyber proposition?
In order to successfully introduce the new proposition, it is crucial for Interpolis to learn the price-sensitivity of (potential) customers. The price-sensitivity helps to determine the right price for sales volume optimization (at the desired margin).
We approached flowresulting to get an answer to our question, because they have specific knowledge and expertise in the field of pricing and customer value. This is an important driver for a good result.– Emy de Kock, Business Developer at Interpolis.
Case in short
- Question: What is the optimal price for the new cyber prevention check?
- Approach: The optimal price is determined in a 4-step plan, which entails team and strategy sessions, quantitative research and the value-based pricing method of flowresulting
- Duration: 6 weeks
- Result: insight in the optimal price and a clear estimation of sales volume
Determining price sensitivity and willingness to pay based on conjoint analysis
In a quantitative online survey (conjoint analysis), various propositions of cyber prevention checks were presented to hundreds of customers. Respondents were asked multiple times to select their preferred proposition. In doing so, respondents made trade-offs between different product, service and brand features. Based on these trade-offs, the attractiveness of both existing services and the new proposition was quantified.
The research answered the following questions, among others:
- Which criteria are most important for customers when considering a cyber prevention check? To what extent does this differ per customer segment?
- How much value do customers assign to the cyber prevention check?
- In case competitors introduce a similar service: how much value do customers assign to their proposition?
- How much are customers willing to pay for specific benefits, such as customization of the service?
- How price sensitive are (potential) customers?
- What sales volume can we expect at what price?
Figure 1: Flowresulting’s value based pricing model provides insight into the price/value ratio of the new service compared to competing services.
Based on the study, specific recommendations were made about the optimal design and pricing of the new proposition. In addition, a market simulator was developed, which is tailor-made to the business situation of Interpolis. Among other aspects, this simulator reveals what customers are willing to pay for different propositions. This enables Interpolis to simulate many possible future strategic scenarios. For example to learn the impact of price adjustments or market introductions from competitors on sales volume.
We are very pleased with the quick and professional cooperation. Flowresulting has exposed new opportunities and proven that they really understand our business. We would definitely recommend flowresulting to colleagues or business relations.
This project has given us clarity and insight into the features that really matter to customers. We confidently determined the price for our new solution. Main conclusion: with the right price, the sales potential of the cyber prevention check is greater than expected.