Gabor-Granger

How the method works

Respondents see a product with a price and say whether they would buy it. Depending on the answer, a higher or lower price follows until a limit is reached. Across all respondents, this gives a share of stated willingness to buy for each price point, and from that a demand curve and a revenue curve.

Unlike Van Westendorp, Gabor-Granger works with predefined price points and delivers a quantity per price. This makes the method attractive for revenue calculations.

Why this matters for your decision

Gabor-Granger is more concrete than asking what an appropriate price would be. It can show whether stated willingness to buy drops sharply or barely between two prices. For an initial revenue estimate, this is useful.

The weakness lies in the set-up: each person sees several prices in a row. The first price acts as an anchor for all the others, and anyone who notices that the price falls when they decline answers strategically. A meta-analysis finds that designs in which the same person sees several conditions overestimate willingness to pay more than designs in which each person sees only one condition (Schmidt & Bijmolt 2020).

Example

For a mobile tariff with 50 GB, a Gabor-Granger survey shows stated willingness to buy of 48 percent at €19.99 and of 41 percent at €24.99. The revenue curve points to €24.99.

In the behavioural test, in which each person sees only one price, measured sign-up intent falls considerably more sharply between €19.99 and €24.99. The difference shows how much the comparison within the survey flattened the price response.

How it differs

Van Westendorp delivers an accepted price range without quantity. Gabor-Granger delivers a stated quantity per price. Conjoint analysis varies price and other attributes at the same time.

A behavioural test resembles Gabor-Granger in its logic, demand per price, but separates the prices between people: each person sees only one price, and instead of stated willingness to buy, measured purchase intent on a realistic offer page is captured.

Limitations

The demand curve remains stated. In 1970, Gabor, Granger and Sowter themselves compared hypothetical purchase situations with observed purchasing behaviour in shops and derived limits of applicability from this. The method shows no alternatives and no environment in which the decision is otherwise made.

The behavioural test, too, only measures the tested price points and does not reflect a shelf decision next to competitors.