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Overlap levels in Conditional Pricing

Dear All,

In our study  (CBC, we use SSI v7) I would probably have to use conditional pricing solution. There are 3 products A,B,C  . Products A and B are similar , product C differs a bit technically but competes directly with A&B and is priced  higher. Below is example of price levels for them :
 Price AB ($10, 20,30,40,50,60)  Price C ($50,60,70,80,90, $100)  as you can see levels with prices $50 and 60 overlap. Exp.  level 6 for price AB ($60) equals  level 2 for product C.  I know I could compress to 6 levels price ranges $10 to $100 and interpolate but jumps between prices (d=20) and implemented prohibitions  would decrease sensitivity - so this option is not taken into account. So my question is - whether by ovelapping price levels for product AB and C I don't harm the study by doing something against the rules ?
I would be  grateful for any remarks,
Robert
asked Jul 29, 2015 by robson Bronze (595 points)
edited Jul 30, 2015 by robson

1 Answer

+1 vote
Hi Robert,

You could use CBC's cross concept prohibitions to ensure that the premium product doesn't show up at a lower price than either of the lower-end products, and this should not hurt design efficiency much at all.  C could still appear at $50 and $60, just not if A or B were also at $50 or $60.  Also, carefully consider whether this is indeed "against the rules". We often see cases where larger packages are priced lower than smaller packages, premium goods are on sale for lower prices than store brands, nicer hotels have cheaper rooms than basic hotels, etc. If tasks only appear occasionally that break "the rule", then perhaps your best strategy might be to ignore "the rule" and just let the designer go where it wishes.
answered Jul 29, 2015 by Aaron Hill Silver Sawtooth Software, Inc. (7,535 points)
Thank you Aaron!  
My understanding of your approach is to combine price levels from products A&B with levels of C in one attribute 'price' and then use not 2-way within-concept prohibition but between-concept prohibitions. So far ok. but I would end up with 10 levels of price (from $10 to $100). Don't you afraid it's too many for an efficient desing ?  I always got an impression that number of levels for any attribute in CBC should not cross 7-8... The worst thing is that we will have probably add 3 more price levels for the product C what would increase number of levels to 13 in total. Seems a lot...  that was my main anxiety which directed me to conditional pricing option (where unfortunately I faced another issue 'overlap levels' described above).
How would you deal with these 13 price levels ?
Robert
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