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How Virgin Pure was able to successfully execute a 15% price increase with Horizon

In a market environment that is currently more than volatile, pricing is more than just a set of numbers. It is the key to leveraging operating profits. As Michael Marn and Robert Rosiello published in the Harvard Business Review back in 1992, a small price increase of just 1% can lead to an impressive 11.1% increase in operating profit. However, this concept can also be turned around very quickly in the opposite direction: If a company lowers its prices by just 1%, this can lead to a significant 11.1% drop in profit.

A shelf in a store displaying various models of electric kettles with price tags, highlighting a black kettle priced at £49.97 with a yellow discount tag indicating savings compared to the original price.
Source: Michael V. Marn and Robert L. Rosiello, HBR, https://hbr.org/1992/09/managing-price-gaining-profit

The UK-based company Virgin Pure is aware of the importance of pricing. Virgin Pure, an innovator in the consumer goods sector, faced the challenge of implementing price adjustments in a volatile consumer market but struggled to obtain reliable market data using traditional market research methods.

In search of a solution with real market data, Virgin Pure turned to German start-up Horizon. Horizon is a B2B SaaS that helps innovation and product teams estimate market success for strategic product decisions before market launch. Leading companies and brands such as BSH, Bosch, Babbel, Hansgrohe and cosnova already use Horizon to make innovation and product decisions with the highest possible confidence.

Virgin Pure has now used the new method of behaviour-based consumer research for the first time to optimize the price of its Smart Water Dispenser. Using so-called smoke tests, Horizon can uncover trends in customer behaviour already in the pre-market phase through the real-time analysis of quantitative and behavioural data.

Smoke tests, also known as fake door tests, are a market research method in which a product or service is advertised that does not yet exist. Purchase or usage intentions are measured to assess interest and demand before actual resources are invested in development.

This market research strategy has paid off handsomely for Simon Vingoe, the marketing director at Virgin Pure. Based on the data provided by Horizon, a whopping price increase of more than 15% on the monthly subscription price was implemented - without any fear of a drop in demand for the product. On the contrary, the consumer data indicated that a price increase was accompanied by increased demand. Referring to the study by Michael Marn and Robert Rosiello reproduced at the beginning, it is possible to see the enormous effect this price increase is likely to have on Virgin Pure's operating profit.

The graph on the left shows the price gain variant of the Horizon test; the image on the right lists the current monthly price point of the Smart Water Dispenser.

Learn how Bosch was able to increase the price from 179€ to 199€ with the help of Horizon

In further test sequences, Virgin Pure also investigated the influence of anchoring bias in the selection of the Smart Water Dispenser. Horizon made it possible to determine not only whether an anchoring price increases demand, but also the exact level of this price. The winning variant showed an impressive 30% higher purchase intent than variants without or with a signal price that was too high. A small adjustment to the presentation on the website with an enormous effect.

Comparison of two identical kitchen scenes with a modern coffee machine and kitchen accessories. On the left, a tag with 'monthly rental £29.99*' floats above the machine. On the right, the tag states 'monthly rental £29.99*' and 'product RRP £449.99' with a promotional highlight."
Exemplary presentation of the product without (left) and with anchoring price (right)

Satisfied with the outcome of the tests, Simon Vingoe attested,

"The insights provided by Horizon enabled us to implement an astonishing 15% price increase with confidence. The data-driven approach not only allowed me to make an informed pricing decision, but it also demonstrated the tangible impact of this specific kind of research on our operating profits."

A so-called Flight with Horizon is possible within 3 weeks from the briefing to the result. Even faster for existing customers. The Horizon team offers a full service: together with its customers, the team of experts defines the research question, sets up a suitable test design, implements the landing page test technically and interprets the acquired behavioural data. As a customer, you have access to all relevant test parameters at all times via the proprietary Horizon dashboard.

For companies interested in optimising their pricing strategy based on real consumer data, Horizon offers exciting insights on its website.

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Learn how Bosch was able to increase the price from 179€ to 199€ with the help of Horizon

Written by
Daniel Putsche
Daniel is the Founder & CEO of Horizon. He is driving the strategic development of the organization, establishing a thriving company culture with a team on a mission to help teams build products that customers really want. Daniel has a strong track record in sales, marketing and building startups from zero to one. Before Horizon, he successfully founded and co-founded multiple companies, i.e. Candylabs, BikeBeat and Venture Advisory Partners.
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