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Pricing strategy for a leading insurance company

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Pricing strategy for a leading insurance company

Nous partnered with a leading insurance company to identify the ideal price point for a range of new products and understand any potential impacts on existing products.

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A pricing strategy for a new home repair service

Nous initially worked with the company to shape and co-design an innovative home repairs and maintenance service. Following this, the company sought to better understand the ideal price point for each product, and understand any potential cannibalisation that could impact other existing products.

Our unique pricing approach helped the company position the service competitively

Nous’ previous investigation with the company had established that the market is price sensitive, and highly fragmented. Success in the market required a deep understanding of the customer’s willingness to pay and the relative value of benefits from the service. We identified the most likely customers based on previously defined personas, and worked with potential customers to determine the ideal pricing strategy for a representative set of different home repair services that could be included in the offer at launch.

The process involved:

  • surveying over 800 potential customers and over 450 current members to test their willingness to pay at different price points using the proven Gabor-Granger method
  • using the survey results to build demand-elasticity curves for individual services and the best choice of price point to maximise the value of the portfolio
  • assessing the financial returns and implications for the business model to determine at what price point the company could maximise its profit margin.

We compared different possible pricing models, including those used by other providers, then integrated our findings into the existing business case for implementation.

We ascertained the preferred model and proposed three different versions of that model, highlighting the one most preferred by the market.

The findings allowed the organisation to confidently launch the pilot

The findings from the research were applied to the financial model to improve the accuracy of the revenue projections and the net present value in the business case. This allowed the client to confidently progress to the pilot launch of the service with the approval of Board members.

What other organisations can learn:

  • Prioritise understanding the most important service attributes to customers.
  • Understand customers’ motivations and pain points at each stage of the value chain.
  • Consider simplicity, sustainability and member value in selecting service access and pricing models.
Tags: pricing strategy, product design, strategy

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