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How to Set Pricing Using
the van Westendorp Price Sensitivity Meter




     By Dana Stanley, Vice President, Marketing, Survey Analytics
Survey Analytics
DIY software for data collection, analysis and visualization.
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
Old   New
Completely New
(Goldfish Carrier)
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How Are
   Prices
Usually Set?
Guessing
Finger
in the
 Wind
Negotiation
Negotiation
Trial and Error
Fear
Pricing Surveys
What Price
Would You Be
Willing to Pay
for ________?
 The “Willingness
to Pay” Question
Too Blunt
Too Blunt
Lowballing
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
A Range
$20.00?
$20.00?



 $2.79
Priced too High   Lost Sales
$100.00?
$100.00?




$1,200.00
Priced too Low

  Lost Profits
Too        Lost
High      Sales

       Acceptable
       Price Range

Too       Lost
Low      Profits
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
Van
Westendorp, P
  (1976) "NSS-
Price Sensitivity
Meter (PSM)- A
new approach
    to study
   consumer
 perception of
     price."
Proceedings of
 the ESOMAR
   Congress.
Too        Lost
High      Sales

       Acceptable
       Price Range

Too       Lost
Low      Profits
•   Too Expensive
High   •   Expensive




       •   Bargain
Low    •   Too Cheap
•   Too Expensive
High   •   Expensive

            Price
           Signals
           Quality
       •   Bargain
Low    •   Too Cheap
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
Too Expensive

  At what price would you
 consider _________ to be so
expensive that you would not
     consider buying it?
Expensive

  At what price would you
consider _________ starting to
get expensive, so that it is not
 out of the question, but you
  would have to give some
    thought to buying it?
Bargain

  At what price would you
 consider _________ to be a
bargain, a great buy for the
          money?
Too Cheap

   At what price would you
   consider _________ to be
priced so low that you would
 feel the quality couldn’t be
         very good?
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
$1,799
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
Higher

   Ordinal
  Validation

  For each
 respondent

Bounding logic
  or post hoc
data cleaning
                 Lower
Plot        Cumulative
Cumulative    (Too Expensive)
Percentages
                  Inverse
                Cumulative
              (Not Expensive)



                  Inverse
                Cumulative
              (Not a Bargain)



                Cumulative
               (Too Cheap)
X-Axis: Cumulative Proportion




  Y-Axis: Price
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
Point of
 Marginal
Cheapness
  (PMC)
Point of
               Point of
 Marginal
              Marginal
Cheapness
            Expensiveness
  (PMC)
                (PME)
Range of
            Acceptable
              Prices




 Point of
                            Point of
 Marginal
                           Marginal
Cheapness
                         Expensiveness
  (PMC)
                             (PME)
Range of
             Acceptable
               Prices




 Point of
                                     Point of
 Marginal
                                    Marginal
Cheapness
                                  Expensiveness
  (PMC)
                                      (PME)




            Optimal Price Point
Other Options
Measure 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.
How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
By Product, By Target Group
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
Any Questions?
Use the GoToWebinar Control Panel




dana.stanley@surveyanalytics.com

http://surveyanalytics.com




Contact us with any
questions after the webinar.

Thank you!

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