Pricing buildings products and determining the optimal product features available at a certain price is a critical piece of the go-to-market strategies for any brand.
To position your company for success, you have to analyze competitor prices, understand price sensitivity within your target market, and accurately evaluate what your customer is willing to pay for a new product or new features.
In the best of scenarios, a good pricing strategy serves to increase your market share, prop up your brand values, and yield favorable profit margins.
Additionally, with the financial and economic challenges facing both professionals and homeowners in 2026, from inflation and increasing labor costs to the impact of the United States' tariffs, it’s important for building products manufacturers and suppliers to employ market research to have meaningful data and insights to use for developing their pricing strategy.
What Factors are Influencing Price Sensitivity in 2026?
Price sensitivity refers to how much the price of a product impacts consumers’ purchasing behaviors, or how much demand changes based on the cost of the product. Typically, it is measured using the price elasticity of demand. Studying and analyzing price sensitivity can help manufacturing brands make informed decisions when evaluating and pricing products and materials.
From a broad perspective, our Quarterly Homeowner Activity Tracker and Quarterly Pro Activity Tracker give insight into how both segments of consumers are feeling about the economy, their personal finances, and taking on home improvement activities. Psychology can have a greater impact on behaviors, so it’s important for manufacturers and suppliers to understand how their attitudes and perceptions impact their decisions when it comes to investing in home improvement projects and products.
Some of the main concerns that continue to impact consumer confidence and spending, making consumers more price sensitive, include the economy, inflation and personal finances. Additionally, builders and contractors are responding to pricing pressures from homeowners and build-to-rent investors to complete the project cheaper as material costs remain high.
However, there are other factors that can impact consumers’ purchasing behaviors and price sensitivity, including:
- Household income levels
- Price differentiation
- Perceived value
- Market availability
- Competitors’ prices
- Brand loyalty
How Do You Evaluate Customer Willingness to Pay When Developing a New Product?
When developing a new product, you have to determine what your target audience will be willing to pay, and what other factors could affect their behavior. The first step when developing competitively priced building and home improvement products is to focus on price elasticity. Price elasticity measures the change in purchase intent, or consideration, of a product in relation to the change in its price, its features, and to competitor offerings.
In light on the current building and remodeling environment, it’s important that manufacturers and suppliers start making moves to ensure that their offerings are varied enough. By having product lines and feature sets that solve customer needs that are clearly differentiated between “good, better, and the best,” companies can create a more resilient base of SKUs that have acceptable price ranges.
Your product development team has two primary options for developing this base of “good, better, and best” SKUs while considering the effects of price elasticity on product demand.
Option 1: Feature Enhancement Refinement
Your teams need to first develop a deeper understanding of current customer pain points and how those pains correlate with feature & benefit preferences. Equipped with this understanding, your brand can refine and relaunch eliminated SKUs or adjust existing offerings to reintroduce a more competitively priced product.
Option 2: Launch a new product with entirely new features
SKUs that were eliminated may be best left off the table in lieu of products that better address unsolved customer needs and the emerging need for more affordable options that do the job good enough to get the sale.
What are the Best Methods to Research Pricing for a New Product?
To know at what price point the marketplace will support, you can conduct pricing research as part of your product development efforts.
During the pricing elasticity and feature valuation stage of market research, you can utilize a variety of research methods and modeling to gain insight on which combinations of features are most desired and at which price points. You should be investigating the answers to important questions, such as:
- What features most impact product preference?
- How much would customers be willing to pay for a product with certain features?
- What is the ideal set of features that we should build into the product and at what price point?
Along with pricing research, you should conduct Brand Health research to understand how existing and potential customers perceive your product and associated features, helping you customize your pricing strategy to increase your sales.
There are three primary pricing research methods you should consider for pricing in the building and home improvement industry: Conjoint Analysis, Van Westendorp, and Gabor-Granger.
Here is an overview of each research method and the pros and cons of each one when applied to product pricing:
Option 1: Conjoint Analysis for Pricing
When it comes to which market research techniques are best for pricing strategy, Conjoint Analysis is the most widely accepted approach because it can deftly handle the necessity to compare dozens of product feature variations. Another reason to prefer Conjoint Analysis is the ability to simulate the real-world competitive marketplace and capture more accurate customer intents by forcing trade-offs to be made.
While there are various types of conjoint, the most common is “choice based conjoint”, where respondents are presented with variations of product options, product features, and price points and then asked a simple question: “which one would you buy?”
In this way, Conjoint Analysis serves to provide detailed decision-making information about feature evaluation and a customer’s willingness to pay. You can also determine how much more a customer would be willing to pay for certain features, such as a power tool with a rubber over-mold on the handle vs. one without, or a walk-behind mower that comes with 3 speeds vs. a single speed.
Traditionally used in product development for new or re-engineered products, conjoint can also be a great solution when price sensitivity increases in the market. This is the methodology that our team at The Farnsworth Group applies when conducting product development and pricing research for building products manufacturers.
Option 2: Van Westendorp Pricing Model
The Van Westendorp Pricing Model is a straightforward pricing sensitivity modeling tool to administer. The approach asks respondents four questions to determine the “Acceptable Price Range.” Those questions are:
- At what price would this product be so cheap that you would doubt its quality and not consider it? (called the “too cheap” price)
- At what price would this product be a bargain – a great buy for the money? (called the “acceptably cheap” price)
- At what price would this product seem expensive, but you would still consider buying it? (called the “acceptably expensive” price)
- At what price would this product be too expensive for you to consider? (called the “too expensive” price)
The Van Westendorp Approach to Measuring Price Sensitivity is a less scientific and less trustworthy approach to conducting pricing research than Conjoint Analysis. Because the respondent’s purchase intent ratings are typically not being made in a realistic competitive context, this approach lacks the rigor of evaluating true market forces impacting a customer’s purchase decisions.
Despite its lack of rigor for a matured, competitive marketplace, there are scenarios when the Van Westendorp Approach is a good first step, such as for brand-new-to-the-world products that lack an established competitive context. Use this approach to conducting price sensitivity research when you want to identify an acceptable price range of products.
Option 3: Gabor-Granger Approach
The Gabor-Granger Approach to conducting market research for product pricing is the least favorable method of the three. Because the structure of the approach assumes an initial price, the results are thereby subjected to a level of anchoring, and the results tend to be biased. The pricing used during questioning could be wrong, thereby skewing the reliability of the study results.
Further, the way the questions are administered make it clear to research respondents that they are participating in some sort of pricing game. Beyond this, the respondent usually is not comparing the test product against relevant competition, and the approach is limited to typically studying just a single or a very few variations of a product concept.
Both the Van Westendorp and the Gabor-Granger Approaches share a primary weakness: few versions of the product concept can be tested, and competing product options are entirely ignored, thereby creating the possibility probability of an invalid study if one of your competitors offers a similar product at a lower price point.
The Gabor-Granger Approach is not all bad, though, and can still be a preferable option for pricing research in scenarios where you’re looking to determine revenue optimizing price points. Do bear in mind, though, that a revenue optimized price may be different from a profit optimized price point.
Conducting Product Pricing Research with The Farnsworth Group
Price sensitivity among contractors and homeowners alike has been increasing in light of several geopolitical and economic factors. Making sure your brand develops and offers product lines at various price points is increasingly important to ensure your brand maintains current and growing market shares.
Our market research team at The Farnsworth Group can help you conduct market research for setting product prices during the development phase. We apply the principles of conjoint analysis and modeling to provide recommendations on which combinations of product features are most desired and at which price points. The result is a product and pricing strategy customized to increase your sales.
