How to enforce non-positive price coefficients on Conjointly?

The option to enforce non-positive price coefficients for Generic Conjoint and Brand-Price Trade-Off (BPTO) is available, but we do not recommend enabling this option unless you have extremely strong reasons to believe in the assumptions about preferences for lower prices.

Generally, the assumption about consumers’ preferences for lower prices holds true especially for FMCG products. However, there are at times when consumers would prefer higher prices instead, with one of the possible reasons being price-quality inference (i.e. higher price indicates better quality). This will result in one of the following scenarios:

• Getting positive price coefficients, i.e. higher price indicates greater preference among respondents
• Getting non-linear price coefficients, i.e. respondents prefer a certain price point, and not necessarily the lower and/or higher prices

Both scenarios above will have the following consequences:

• Marginal Willingness To Pay (MWTP) from Generic Conjoint will not be available
• In the preference share simulator, the price attribute will be treated as categorical, so you cannot input any prices other than the price levels tested (i.e. prices specified in the experiment setup)
• The output of preference share simulator will also be affected by the price coefficients. For example, it will show greater preference share when the product concept has higher price and show positive or non-linear price elasticity of demand (PED)

If you have a strong reason to believe that the consumers will always prefer lower prices for your products/services, and would like to avoid having non-linear or positive price coefficients, you can take the following steps to enforce a non-positive price coefficients:

• Go to the Advanced settings tab of your experiment and look for the Analytics options module
• Check the option for “Enforce non-positive price coefficients”
• Click Save changes at the bottom of the page
• Click View report and your report will be recalculated to apply the changes

By enabling this option, Conjointly will rescale the price coefficients to be linear and non-positive. Hence, the MWTP output from Generic Conjoint will be available, the price attribute will be treated as continuous, and the preference share simulator will not show greater share for higher prices and positive PED. However, you should be cautious in interpreting these results because this option will likely underestimate the impact of price.

Comparison of outputs before and after enforcing the non-positive price coefficients:

Below is a hypothetical example. Actual results will differ from study to study.

Before enforcing non-positive price coefficients

• MTWP output is not available in Generic Conjoint because respondents do not necessarily prefer lower price

• The price attribute in preference share simulator is treated as categorical. Therefore, it is not possible to input any prices other than the price levels specified in the setup

• The preference share simulation output shows greater preference share with a higher price, for example: A market simulation of 3 product concepts with the same configuration but different pricing ($24,000, $28,000, and $32,000) shows the following results:
  • Product concept 1 with price $24,000 takes ~19% of share
  • Product concept 2 with price $28,000 takes ~18% of share
  • Product concept 3 with price $32,000 takes ~61% of share

After enforcing non-positive price coefficients

• MTWP output is available in Generic Conjoint after the readjustment of price coefficients

• The price attribute in preference share simulator is treated as continuous. Therefore, you can input any price points within the price range tested to simulate the preference share

• The preference share simulation output minimises the impact of price on preference share, for example: The same market simulation shows a more similar distribution of preference share for each product concept:
  • Product concept 1 with price $24,000 takes ~34% of share
  • Product concept 2 with price $28,000 takes ~33% of share
  • Product concept 3 with price $32,000 takes ~32% of share