Prices Drives Many, But Not Most, Purchase Decisions


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We surveyed 10,000 U.S. consumers about the purchases of 14 items they had made during the previous 90 days, asking them to identify the most important criteria in their purchase decision. As you can see in the graphic below…

  • Price is important, but… In eight of the purchases, price was the most selected criteria. But it was only selected by a majority of consumers for two areas: airline tickets and auto insurance policies. The importance of prices ranges from 65% for airline tickets down to 22% for credit cards.
  • Product and service features is next. For six of the purchases, the features were most important, ranging from 42% for mobile phones down to 5% for airline tickets.
  • Company reputation is for a few. Consumers that selected reputation of company as the most important criteria ranged from 22% for investment firms down to 5% for airline tickets.
  • Customer service rounds out the top. The percentage of consumers who selected their product primarily because of customer service ranges from 12% for bank accounts to 3% for mobile phones.


My take: Let’s face it, price is important. Companies can’t dominate most markets unless they have a compelling price point. But there remains a large portion of all markets where consumers are not as obsessed about prices. Consumers actually make most of their decisions based on factors other than price.

Think about competing on a price-plus strategy. Identify the competitive positioning of your prices, from lowest in the industry to highest in the industry. If you’re focused on the lowest price, then you need to do everything in your power to control your costs and maintain the low prices. At the other end of the spectrum, you need to do everything you can to add value to customers to justify your premium. Every position in between requires companies to keep an eye on their price levels PLUS provide value in the form of features and customer experience that justify their price point.

Even the consumers who say they care about price can be influenced by other factors if they are presented in a more compelling way. In the two most price sensitive purchases, auto insurance and airline tickets, the sales efforts in those areas often focus heavily on price. So the industries actually train customers to overfly focus on price.

We’ll dig a bit more into some purchase behaviors later in the year.

The bottom line: Most companies should not compete aggressively on pricing

Republished with author’s permission from original post.

Bruce Temkin
I'm an experience (XM) management catalyst; helping organizations engage the hearts and minds of their employees, customers, and partners. I lead the Qualtrics XM Institute, which is fueling a global community of XM Professionals to radically improve the human experience. Our team focuses on thought leadership, training, and community building. To understand me, read my manifesto: Experience Matters (


  1. Nice to see that price is being recognized as a factor. One thing I find odd is that “convenience isn’t addressed specifically. Wondering if that’s an artifict of the questions you ask.

    I have another caution here about survey results, and that is that surveys depend on the ability of customers to accurately represent their own mental processes in decision-making, and my sense is that human beings are really really poor at doing that.

    It’s one reason I don’t put much credence in these kinds of studies, because having looked at a lot of research on cognition and being aware of how one makes decisions, I’ve concluded that self-reports are really really poor reflections on reality.

    Then again, these kinds of studies may be the best we can get. But I suspect putting too much credence in them leads to some really bad decisions.


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