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Price with no shock in ACBC

We are proposing a new study and it looks like a cut and dry ACBC. There will be features that can be added on and will add cost to the base product, but the key is that the prices we are given for each level will need to be exactly what it is. Basically, there can be no shock to the summed price. If the total cost of the base product and its features is $20,000, then $20,000 will be shown to the respondent.

I know we are losing a bunch of information on the price attribute since we aren't shocking it, but the client still wants to know how important the price is.  Now to me the danger in that is that price is almost showing up in two different ways (once within its own attribute and then again for each attribute, since the changing of levels are what affects the price). My initial thought would be to maybe run HB twice. Once to see how importance comes out for price. But then, I would run HB again and not estimate the price estimate (since its really just a frame of reference of already)

Another thought would be to run HB on everything, but when it comes to the simulations to just place a "N/A" in the price attribute. This seems dangerous though since HB was used to model all the attributes together.

Thanks so much
asked Dec 9, 2014 by Mike S (240 points)

2 Answers

0 votes
Unless you randomly shock the total price, you cannot separately estimate a price importance (utilities for price).  The price levels you've attached to the different attribute levels will be perfectly correlated with the presence/absence of these levels.  So, the utility for the attribute level will be confounded with the fixed price penalty always attached to the level.

Think of it this way, let's say I ask you one question:

Which do you prefer:

Sandwich  $3.00
Hot dog  $2.00?

You answer that you want a Hot dog.  Can I determine your price sensitivity?  How do I know that the reason you picked the hot dog was due to your love of hot dogs or your desire to pay $1.00 less?
answered Dec 9, 2014 by Bryan Orme Platinum Sawtooth Software, Inc. (154,305 points)
0 votes
Hey Mike,

What would happen if you shocked the price, but only in one direction?  for example, maybe you can shock it +30%, but set the low-shock value to 0.  when the different prices are shown, you should see an increase in demand corresponding to a decrease in price, and vice versa (any other behavior would be a reversal, indicting other problems in the design).  

At least then you could get a reliable estimate of importance of price relative to the attributes that actually vary, all other things being equal.
answered Jan 13, 2015 by Dino F.