Text-Based Predictive Analytics

The Problem:
Our client came to us looking to identify the optimal pricing for their dental services. Given competitive pressures and on their business model, they needed to value their services at price points that would remain attractive to prospective patients while still maximizing business outcomes.
Our Approach:
We used an online survey to conduct a Van Westendorp pricing study. The Van Westendorp Price Sensitivity Meter is a pricing technique where respondents are asked questions directly about their price preferences. The method relies on respondents having some familiarity with products or services being studied, as well as the principle that price can signal quality (especially on the low end). We supplemented the results from the Van Westendorp method by creating demand and revenue curves for each of the services to help our clients understand the influence of price on revenue.
What We Found:
We analyzed the results according to the Van Westendorp method for price sensitivity, as well as used the Newton-Miller extension to more precisely estimate demand at different price points. What we found was that, while price appeared to be a significant barrier to action, our client had room for price increases in 4 out of the 5 procedures we tested. 
Now What:
We recommended that our client increase prices for 4 of their procedures to maximize profit. In knowing the elasticity of demand for each of our client’s dental procedures, we could be sure that our recommendations would maximize their business outcomes without jeopardizing their current number of patient visits.