Price laddering implies asking potential buyers if they are ready to purchase a certain product at a certain price, which is usually ranked on a scale from 1 to 10. If the respondent’s answer is somewhere below a pre-set minimal threshold (for example, 7 or 8), the price is too high and should be reduced. After that, the cost is being lowered to define the price point at which customers are ready to purchase the product.
Although this sort of research can be conducted repeatedly, the majority of customers are asked about a maximum of three price points to avoid bias in their responses. The data collected in the research is used to calculate the percentage of the market that would buy a product at a certain price.
The best thing about a price ladder is that respondents are not asked to make any particular price suggestions. Instead, they match their intent with a scale, which makes their answers straightforward. At the same time, the results might be far from reality because some respondents refuse to buy at any price points you suggest, and some treat the survey as a negotiation, which affects the accuracy of research. Besides that, price laddering requires a large client database which complicates research for small businesses that lack an audience.