Conjoint analysis for pricing decisions

This chapter introduces conjoint analysis as a powerful tool for pricing decisions by estimating customer preferences and willingness to pay. Using data collected from alpine skiers at a major Norwegian resort, the chapter demonstrates how rating-based conjoint analysis can quantify the relative importance of product attributes—such as price, waiting time, and weekday—and estimate reservation prices. Building on the method proposed by Kohli and Mahajan (1991), a step-by-step guide to deriving price-response functions and calculating optimal prices using Excel is provided. The chapter also emphasizes the importance of proper data organization and provides detailed guidance on implementing the full procedure in Excel using built-in functions such as LINEST, OFFSET, and Solver. By combining consumer choice modeling with practical pricing tools, conjoint analysis allows firms to tailor prices based on actual market preferences, enhancing pricing accuracy and strategic value. The techniques presented are especially valuable for service industries and product configurations where price interacts with multiple attributes.