Incorporating price sensitivity measurement into the software engineering process

Abstract

Software developers typically make critical design decisions without understanding how the market will value the final product in terms of the price that customers are willing to pay. Market research techniques that rely on simulated purchase situations, laboratory experiments, and actual purchase behavior are often dismissed as too expensive, too time consuming, or too impractical. What is needed is a quick and cost-effective method for assessing customers' price expectations that can be utilized at key points in the software development process where design are at stake. Price sensitivity measurement (PSM) research provides product developers with the capability to quickly assess the range of acceptable prices, indifference points, and optimum pricing points for any given software configuration.