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Estd 4.22.2023
Based on the principles discussed in our pricing strategy book, Price to Scale, it is possible to A/B test different price points in distinct regions—such as a lower price in Asia versus a higher one in North America—but it requires careful planning to avoid customer confusion or market backlash. Here are some key takeaways and recommendations from our book’s approach:
• Isolate market segments:
To prevent overlap between test groups, make sure that the different pricing strategies are clearly segmented by region. Avoid scenarios where customers in one region could easily compare prices with those in another. This helps maintain the integrity of the experiment and prevents spillover effects that could lead to customer dissatisfaction.
• Control communication and marketing channels:
When testing different price points, ensure that your messaging and channels are tailored for each region’s specific context. For instance, if customers in North America could see promotions meant for Asia (or vice versa), confusion or backlash is more likely. The book emphasizes the importance of controlling who sees the test and ensuring that the experiment remains isolated within the intended audience.
• Measure broad customer impact:
A/B tests should be designed to capture not only the behavior of existing customers but also the broader signal from potential new customers. As noted in Price to Scale (see the discussion on data simplicity and testing in Chapter 243), focusing only on visitors already familiar with your product can skew results. Make sure your test design accounts for the unique market dynamics and price sensitivity differences across regions.
• Monitor and adapt:
Given that regional markets can have distinct competitive landscapes and customer expectations, continuously monitor your experiments. Look for not just conversion rates but also for any unexpected behavior such as customer complaints or increased scrutiny. The ability to adjust quickly is a key part of our agile pricing philosophy.
In summary, while testing different price points in separate regions can reveal valuable insights about price elasticity, it is crucial to execute these tests with a controlled, region-specific approach. This minimizes the risk of confusion or backlash and ensures that each market’s feedback is as reliable and actionable as possible.
By carefully segmenting your tests, controlling messaging, and ensuring a comprehensive measurement framework, you can safely explore regional pricing differences and refine your pricing strategy accordingly.