In-market price testing means that you are testing what customers are willing to pay for your product or service by charging different customers in the same market different prices.

It is not always practical to charge different prices for the same product or service in the marketplace. You cannot charge different prices for what is perceived as the same product bundle if market participants will communicate with each other. If one market participant finds out that another participant bought what they perceived as the same product bundle at a better price, they will feel cheated. If the customer perceives the product bundle to be different, then the consumer will not necessarily be upset about hearing that someone else paid a different price. 

If there were three alternative price policies to test, then every potential customer would be exposed to one of the three different pricing policies, and each customer would have a 1/3 probability of being exposed to each policy. As long as it's pretty difficult for the potential customer to compare the pricing algorithm actually used by your salesperson, it will be difficult to compare prices across different potential customers. For example, if the pricing of software is developed based upon a fixed charge for organizational training, another charge for installation, and another set of charges per "seat" or installed computer terminal, then it becomes difficult for two firms of different needs to compare prices.

Web surveys are very suitable to conduct experiments on what customers are willing to pay. An other useful method for larger companies is to experiment with different pricing in different regions.

Part of [[M6-S8 - Reading - Lodish - Entrepreneurial pricing- an often misused way to garner extraordinary profits]]
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marketing_public
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Thu, 23 Sep 2010 18:22:46 GMT
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dirkjan
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Thu, 23 Sep 2010 18:22:46 GMT
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dirkjan
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Entrepreneurial
M6
Marketing
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creator
dirkjan