Gabor Granger is a survey-based pricing strategy developed by business strategist Clive Granger. The price strategy helps to determine the optimal price for a product or service
It is designed to help companies offer a wider variety of prices to carve out niches in the market, increase customer loyalty via offering value, build brand equity with cheaper products and services, and encourage impulse purchases.”
What is Gabor Granger Model?
A Gabor model is a graphical representation of a pricing problem, which helps companies set the correct price for their product or service. It helps to determine market segmentation and market share for each specific category or industry.
A Gabor model also helps to determine the best price for a product or service, so that it is neither too cheap nor too expensive.
How it works:
The Gabor Granger model is based on the mathematical concept of probability. The product needs to be priced for the best profit for each possible price that the customer might be willing to pay.
The model shows the probability of the purchase of a product. It also provides information about the best price for a product and the corresponding profit that can be earned by selling it. This is useful for companies who want to set prices for their products.
Pros and Cons of Gabor Granger Model:
Advantages of Gabor Pricing Model:
Gabor pricing starts with the client’s demand. Most people know what they want and expect to pay for it. That creates a demand curve that needs to be tracked to achieve the best profit.
Following the demand curve helps you set prices that fit the price elasticity of your clients, thereby increasing the probability of sales and corresponding revenues.
- It is a simple process because most companies follow the Gabor pricing model because it offers them the advantage of scaling their prices according to their target market.
- It helps to set price points so that products can be sold at different prices without affecting their average value. This is because the Gabor pricing model identifies market segmentation and building blocks by breaking up the industry into smaller pieces.
Disadvantages of Gabor Pricing Model:
- Gabor pricing makes it easy for competitors to copy your prices, so you need to stay ahead of them by creating value. You can do this by using the Gabor pricing model to offer additional benefits or services that are not offered by your competitors.
- There has been no scientific study on the accuracy of this model, so there is no evidence proving its effectiveness.
- It is difficult to determine the exact price people are willing to pay for a product because the product’s value is subjective. However, the model can help you determine the most probable price customers will be willing to pay.
The Gabor model is a simple process, but it is a good way to find the right price for your product or service. The Gabor model can help you to determine the best price for your product or service so that you can capture maximum profits.
The Gabor Model has proven to be helpful in determining the best prices of products and services, so it should be mastered by companies across the globe.
It provides a technique for estimating probable demand and profits but it doesn’t offer conclusive ideas about market share or pricing structure. You need to put in your own marketing strategies with Gabor Granger Model to increase revenue.