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For a CBC, does a conditional price range for 2 attributes have to be proportional?

I am working on a condition pricing CBC.  It is stripped down and only has three attributes, brand, product and price.  Our main goal is to measure brand equity and we have to test multiple products with different price ranges.  The case is that for example, a product price range may have a mean of X, a min of 0.8X and a max of 1.6X or even 1.8X.

I understand that for conditional pricing if price plus more than more than one other attribute are conditional a proportional range is a must.  But if price and only one other attribute are conditional the range does not have to be proportional right? Are their any guidelines if the pricing is not proportional in the range? Thanks you
asked Jul 11, 2018 by Mark Abramovich

1 Answer

0 votes
Price only has to be proportional if you want to try to estimate the model well using Main Effects.  If you are going to estimate interaction effects between the two attributes (brand and price) then you can do whatever you want in terms of the price range covered for different brands.

But, as soon as you have price dependent on 3 or more other attributes, then making the price ranges proportional and formulaic is extremely important.  Otherwise, you might need a 3-way (or 4-way, etc.) interaction term to unravel the data and fit it properly, and our software doesn't (automatically, without power tricks and data reformatting) provide a way to estimate 3-way (or 4-way, etc.) interaction effects.
answered Jul 11, 2018 by Bryan Orme Platinum Sawtooth Software, Inc. (181,965 points)