<P> The Gabor--Granger method is a method to determine the price for a new product or service . It was developed in the 1960s by Clive Granger and André Gabor . It is a variant of monadic price testing . </P> <P> To use the Gabor - Granger method in a survey, one must find the highest price that respondents are willing to pay . There are many ways to do this but the most common is usually done by choosing 5 price points for the survey and then asking the respondent a 5 - point purchase intent question for a random price from those 5 established price points . If the respondent answers in the top 2 choices -' Definitely Buy' or' Probably Buy' for this question, they are then asked the same question for a random price that is higher than was just asked . If it is not in the top 2 then the respondent is asked the same question for a random lower price . This is done until you find the highest price the respondent is in top 2 on Purchase Intent Scale . If they are not in top 2 for the lowest of the 5 prices, the respondent is usually coded as a zero or deleted from the analysis . </P> <P> For example, say the 5 prices chosen are $1, $2, $3, $4 and $5 . A first random chosen price might be $4 . If the respondent is in top 2 on purchase intent, then there is only $5 left higher so the respondent is asked purchase intent at that price . If they are in top 2 on $5 then the respondent is coded $5 as this is the highest price they are in top 2 to pay . If they are not in top 2 on $5 then the respondent is coded as $4 as this was the highest price they are willing to pay . If the respondent is not top 2 on $4, then they are asked a random lower price . Continue until you have found the highest price the respondent is willing to pay among the price points . This is your Gabor - Granger variable . </P> <P> Once you have this Gabor - Granger variable, the results can be used to produce a demand chart (where x-axis are the prices and y axis the percentage of people willing to pay that price) and a revenue curve (where y - axis is the percentage of optimal revenue and x-axis is still price). </P>

Gabor granger is more useful to determine threshold pricing and not price sensitivity