Van Westendorp pricing studies explained
The Van Westendorp pricing model can help you gauge what respondents are really willing to pay for an item – and how to set a price range for a real-world market.
Researching prices is not straightforward
Determining your price point through market research surveys is a notoriously tricky task. Asking respondents outright tends to result in answers far lower than people are truly willing to pay.
One option is to ask them if they’d buy at progressively higher or lower price points, but this can be time-consuming, and the answers are still not likely to be indicative on their own.
In response to this problem, the Van Westendorp pricing index was developed in the 1970s to measure some key psychological markers that affect price assessment and purchase decisions.
How does the Van Westendorp index work?
Also known as the Price Sensitivity Meter, the Van Westendorp index is a set of four survey questions that help you steer clear of the worst of the biases inherent in asking about price. It can be used to assess a range of prices at once, rather than just a single one. It can also help you understand the impact any future price changes could have.
The four questions are:
- At what price do you think the product is priced so low that it makes you question its quality?
- At what price do you think the product is a bargain?
- At what price do you think the product begins to seem expensive?
- At what price do you think the product is too expensive?
You can leave the answers open-ended (i.e. give respondents space to write in a dollar value) or let them select from a range.
Analyzing Van Westendorp data
The questions are highly subjective and respondents may give very different answers, so it’s important to get a large enough panel for your study to even out any anomalous or outlying answers.
Once you have your data, you can plot the answers for each question on a graph. Where the lines for ‘question its quality’ and ‘too expensive’ intersect, you’ll find the OPP (optimum price point) for your product. You can then take this result forward into validation testing to determine the best price in a real-world purchase situation.
Van Westendorp templates… straight out of the box
We’ve built Van Westerndorp pricing studies into the Experience Management Platform™ so you can get started right away. These expert-designed templates provide you with the survey design and reporting to run a proving study in just a few clicks.
Check out our expert-built pricing studies
December 22, 2020