van Westendorp Price Sensitivity Meter (PSM): This is how easy it is to determine the price sensitivity of your customers with QuestionPro

With the van Westendorp “Price Sensitivity Measurement” (PSM) method, you receive valuable information about what your customers would spend on your products and at what price they perceive them to be too cheap or too expensive.

Van Westendorp method: definition

The Van Westendorp method is also called Van Westendorp's Price Sensitivity Meter (PSM for short) in English-speaking countries. It is a very popular and relatively simple methodological procedure for measuring the price sensitivity of a target group. The procedure goes back to the Dutch economist and market researcher Peter van Westendorp and was first mentioned in 1976.

The four questions of the PSM on pricing & price sensitivity

The Price Sensitivity Meter method is about finding out when the price of a product or service is accepted or rejected by the customer. So it is perceived as too expensive, expensive, cheap and too cheap. These four dimensions are presented in the form of four questions:

• At what price would you consider the product to be too expensive and therefore not buy it at all?
• At what price would you perceive the product to be cheap, i.e. doubt the quality of the product because the price is too low
• At what price would you consider the product to be expensive, i.e. you would consider purchasing it, but only after careful consideration
• At what price would you consider the product to be cheap, in the sense of a very good, acceptable offer!

The test subjects then select a price from a given price table for each question. The values ​​are finally cumulated and presented in the form of the following graphic, from which you can read the “optimal price”, which results from the intersection of the curves for “too expensive” and “too cheap”. Tip: in the specialist literature on the Van Westendorp method PSM it is recommended to include a number of subjects of 300 or more in the survey in order to achieve a reliable result.

The “PSM” method can also be implemented and graphically displayed conveniently and easily using our web-based survey, analysis and market research software QuestionPro. Using the questionnaire designer and with the support of a wizard, i.e. a question assistant, you can design questions about the Price Sensitivity Meter according to van Westendorp with just a few mouse clicks, of course in any language!

Van Westendorp method PSM:
Live example with real-time evaluation

→ Here you will find an example of the Van Westendorp method with real-time evaluation

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KEYWORDS OF THIS BLOG POST

van Westendorp | Price Sensitivity Meter | van Westendorp method | Customer Experience