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Calibrating Price in ACA: The ACA Price Effect and How to Manage It (2000)

Even though ACA is one of the most popular conjoint analysis techniques, it has been shown often to understate the importance of price. This article by Peter Williams demonstrates a method of adjusting the price utilities within ACA studies using holdout choice tasks. The holdout tasks typically include a stripped down product at a cheap price, a mid-range product at a medium price, and a feature-rich product at a premium price.

Williams suggests counting the number of times respondents choose higher-priced alternatives (this requires multiple choice tasks), and segmenting respondents based on that scored variable. Then, he suggests developing a separate weighting factor for the ACA price utilities for each segment. He demonstrated the technique with an ACA study involving 969 respondents. He found that no adjustment was necessary for the group that preferred high-priced, high-quality offers; a scaling factor of 2 for price was required for the mid-price segment; and a scaling factor of slightly more than 4 was required for the price sensitive segment.

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