The Van Westendorp Price Sensitivity Meter (PSM) survey is a widely used tool in market research to determine the optimal price point for a product or service. The survey typically includes four key questions aimed at understanding consumer price perceptions. These questions are: (1) At what price would you consider the product to be so expensive that you would not consider buying it? (2) At what price would you consider the product to be priced so low that you would feel the quality couldn’t be very good? (3) At what price would you consider the product to be a bargain—a great buy for the money? (4) At what price would you consider the product to be getting expensive, but still worth buying? These questions help in identifying the price range within which consumers perceive the product to be of acceptable value Dominique-Ferreira, 2019; Lirag, 2024.
The responses to these questions are used to plot four curves: the “too expensive” curve, the “too cheap” curve, the “expensive” curve, and the “cheap” curve. The intersection points of these curves provide critical insights. The point where the “too expensive” and “too cheap” curves intersect is known as the Indifference Price Point (IPP), indicating the price at which an equal number of respondents consider the product to be too expensive and too cheap. The intersection of the “expensive” and “cheap” curves identifies the Optimal Price Point (OPP), where the product is perceived as neither too cheap nor too expensive, thus representing the ideal price for maximizing consumer acceptance Zhang, 2022; Arru, 2022.
The Van Westendorp PSM is particularly useful because it provides a visual representation of consumer price sensitivity, allowing businesses to make informed pricing decisions. By understanding the acceptable price range and the optimal price point, companies can set prices that maximize both consumer satisfaction and profitability. This method is versatile and has been applied across various industries, from hospitality and food products to technology and healthcare, demonstrating its broad applicability and effectiveness in different market contexts Figueroa-Medina, 2022; Berghea, 2020.
In summary, the Van Westendorp Price Sensitivity Meter survey includes four key questions that help determine the acceptable price range and optimal price point for a product. These questions assess consumer perceptions of prices being too expensive, too cheap, a bargain, and getting expensive but still worth buying. The results are used to plot curves that identify critical price points, aiding businesses in making data-driven pricing decisions to maximize consumer acceptance and profitability.
