How to Set Pricing Using the Van Westendorp Price Sensitivity Meter

12,316 views
11,713 views

Published on

In this webinar, Dana Stanley of market research software firm Survey Analytics explains the common pricing research technique called the Van Westendorp Price Sensitivity Meter.

Published in: Business
3 Comments
13 Likes
Statistics
Notes
No Downloads
Views
Total views
12,316
On SlideShare
0
From Embeds
0
Number of Embeds
2,394
Actions
Shares
0
Downloads
217
Comments
3
Likes
13
Embeds 0
No embeds

No notes for slide

How to Set Pricing Using the Van Westendorp Price Sensitivity Meter

  1. 1. How to Set Pricing Usingthe van Westendorp Price Sensitivity Meter By Dana Stanley, Vice President, Marketing, Survey Analytics
  2. 2. Survey AnalyticsDIY software for data collection, analysis and visualization.
  3. 3. Old New
  4. 4. Completely New(Goldfish Carrier)
  5. 5. How Are PricesUsually Set?
  6. 6. Guessing
  7. 7. Fingerin the Wind
  8. 8. Negotiation
  9. 9. Negotiation
  10. 10. Trial and Error
  11. 11. Fear
  12. 12. Pricing Surveys
  13. 13. What PriceWould You BeWilling to Payfor ________? The “Willingnessto Pay” Question
  14. 14. Too Blunt
  15. 15. Too BluntLowballing
  16. 16. A Range
  17. 17. $20.00?
  18. 18. $20.00? $2.79
  19. 19. Priced too High Lost Sales
  20. 20. $100.00?
  21. 21. $100.00?$1,200.00
  22. 22. Priced too Low Lost Profits
  23. 23. Too LostHigh Sales Acceptable Price RangeToo LostLow Profits
  24. 24. VanWestendorp, P (1976) "NSS-Price SensitivityMeter (PSM)- Anew approach to study consumer perception of price."Proceedings of the ESOMAR Congress.
  25. 25. Too LostHigh Sales Acceptable Price RangeToo LostLow Profits
  26. 26. • Too ExpensiveHigh • Expensive • BargainLow • Too Cheap
  27. 27. • Too ExpensiveHigh • Expensive Price Signals Quality • BargainLow • Too Cheap
  28. 28. Too Expensive At what price would you consider _________ to be soexpensive that you would not consider buying it?
  29. 29. Expensive At what price would youconsider _________ starting toget expensive, so that it is not out of the question, but you would have to give some thought to buying it?
  30. 30. Bargain At what price would you consider _________ to be abargain, a great buy for the money?
  31. 31. Too Cheap At what price would you consider _________ to bepriced so low that you would feel the quality couldn’t be very good?
  32. 32. $1,799
  33. 33. Higher Ordinal Validation For each respondentBounding logic or post hocdata cleaning Lower
  34. 34. Plot CumulativeCumulative (Too Expensive)Percentages Inverse Cumulative (Not Expensive) Inverse Cumulative (Not a Bargain) Cumulative (Too Cheap)
  35. 35. X-Axis: Cumulative Proportion Y-Axis: Price
  36. 36. Point of MarginalCheapness (PMC)
  37. 37. Point of Point of Marginal MarginalCheapness Expensiveness (PMC) (PME)
  38. 38. Range of Acceptable Prices Point of Point of Marginal MarginalCheapness Expensiveness (PMC) (PME)
  39. 39. Range of Acceptable Prices Point of Point of Marginal MarginalCheapness Expensiveness (PMC) (PME) Optimal Price Point
  40. 40. Other OptionsMeasure purchase intent at key price levels uncovered by Van Westendorp analysis.Combine with profitability data to determine optimal revenue point. Box-plot of each of the 4 questions for alternate visualization.
  41. 41. By Product, By Target Group
  42. 42. Criticisms and Limitations• Assumption of rationality• Does not account for competition• Lowballing• Not used in conjunction with other techniques• Appears more precise than it really is
  43. 43. Any Questions?Use the GoToWebinar Control Paneldana.stanley@surveyanalytics.comhttp://surveyanalytics.comContact us with anyquestions after the webinar.Thank you!

×