Conjoint Analysis 101
Decoding the DNA of Product Value
Executive Summary
"The ultimate tool for feature-price optimization. Learn how to use Discrete Choice Modeling to calculate the exact dollar value of every feature in your roadmap."
01.The Trade-off Principle
In a perfect world, customers want everything: high quality, infinite features, and a $0 price tag. In the real world, they make trade-offs. Conjoint Analysis is the mathematical study of those trade-offs.
By forcing respondents to choose between 'profiles' (e.g., Option A: $500 with 10GB vs Option B: $600 with 20GB), we can work backwards to find the hidden 'Utility' value of every single attribute. It is the most sophisticated tool in a pricer's arsenal.
02.Key Conjoint Concepts
Attributes & Levels
An attribute is a feature (e.g., Color). Levels are the variations (Red, Blue, Green). Conjoint measures the value delta between these levels.
Part-Worth Utility
A numerical score assigned to each level. If 'Blue' has +10 and 'Red' has -5, the market values Blue significantly more.
Relative Importance
The percentage weight each attribute carries in the final decision. Does Price matter more than Brand? Conjoint tells you exactly by how much.
03.The 4-Step Design Protocol
Identify Attributes
Choose 5-7 features that actually drive choice. Too many attributes leads to respondent fatigue and 'noisy' data.
Set Realistic Levels
Ensure your levels span the market range. If you only test $10 and $11, you won't see the impact of a $20 premium price.
Construct Choice Tasks
Show sets of 3-4 options. Always include a 'None of these' option to reflect real-world market rejection.
Run the Simulator
Once data is in, use a market simulator to ask: 'If I raise price by 10% but add Feature X, how much market share do I gain?'
Industry Benchmarks
Recommended maximum to maintain data quality.
Required for robust segment-level utilities.
The sweet spot for respondent engagement.
Expert Q&A
Q: Is Conjoint better than Van Westendorp?
VW is better for 'How much?'. Conjoint is better for 'What's inside?'. Use Conjoint if you are designing packages (Good/Better/Best).
Q: Can I use it for services?
Yes. Attributes can be 'Response Time', 'Consultant Seniority', or 'Contract Length'.