If you need to increase revenue there’s one very simple thing you can do. Increase your prices.
The consumers who value your product will keep buying, those who aren’t price sensitive won’t notice, and you could stand to make plenty more money.
But what’s the cost? And what are the risks?
Up until now it’s been hard, if not impossible, to measure how a price hike affects consumer perception. But, using Brandwatch Reviews, we’ve managed to do just that.
How does a price change affect consumer perception?
For our analysis we chose to look at a popular gaming headset. It’s listed as “Amazon’s Choice” so gets a large number of purchases and gathers a decent number of daily reviews. It’s also seen significant price alterations over the last few months.
At a glance, it looks like the product is doing well (~4.5 star average overall). But could a change in price affect the star rating?
According to CamelCamelCamel.com’s Amazon pricing data, the lowest price for this headset was listed at $49.99. From February 1 to March 24, the price fluctuated between $60 – $65. On March 25, the product price spiked to $79 and it has remained within $1 of that amount ever since (up to time of writing).
When looking at the review ratings over time from February 1 – present, we can see an interesting trend. When the price rose, the number of 5 star reviews started to drop. At the same time, bad ratings (1 or 2 stars) started to grow.