What is Price Testing? Definition & Examples

What is Price Testing?

Understanding Price Testing in E-commerce

Quick Definition

Price testing is a strategic experimentation method where different price points are systematically evaluated to determine the optimal pricing strategy that maximizes revenue, conversion rates, and customer perception. By scientifically comparing pricing variations, businesses can identify the most effective price that balances profitability and market competitiveness.

2 min read

Mastering Price Testing in E-commerce

Core Price Testing Methodologies

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A/B Price Testing: Comparing two distinct price points simultaneously
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Multivariate Price Testing: Evaluating multiple price variations with different attributes
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Psychological Pricing Tests: Exploring price perception through strategic number positioning

Price Testing Calculation Framework

Revenue Impact = (New Price × Conversion Rate) - Potential Volume Loss

Sample Scenario:

Original Price: $100

Original Conversion Rate: 2%

Test Price: $90

New Conversion Rate: 2.5%

Potential Revenue Increase: Positive

Strategic Price Testing Elements

Psychological Price Points

Leverage cognitive biases with prices ending in 9, 7, or 0

Comparative Pricing

Show value through strategic price anchoring

Segmented Testing

Different prices for different customer segments

Dynamic Pricing

Real-time price adjustments based on demand

Key Metrics to Monitor

Metric	Significance
Conversion Rate	Percentage of visitors completing purchase
Average Order Value	Total revenue per transaction
Customer Lifetime Value	Long-term revenue potential

Advanced Price Optimization

Modern e-commerce requires sophisticated pricing strategies. Tools like Growth Suite enable advanced price testing by tracking visitor behavior, predicting purchase intent, and dynamically presenting personalized pricing strategies that maximize conversion potential.

Successful price testing isn't just about lowering or raising prices, but understanding the complex psychological and economic factors that drive purchasing decisions.