Gabor-Granger Pricing

The Gabor-Granger method is a direct pricing-research technique that estimates a product's demand curve by asking respondents whether they would buy it at each of several price points. Developed by economists André Gabor and Clive Granger in the 1960s through surveys of how consumers perceive and react to prices, it asks a simple question, would you purchase at this price?, across a ladder of prices, usually presented in random order. Aggregating the share of people willing to buy at each price traces a stated demand curve, from which the analyst computes expected revenue at every price and identifies the price that maximizes it. Because it focuses on a single product rather than competitive trade-offs, Gabor-Granger is fast, intuitive, and well suited to setting or testing a price for an existing or clearly defined offering. It also yields a straightforward estimate of price elasticity. Its directness is both its appeal and its main weakness, since asking about price in isolation can prime respondents and overstate price sensitivity.