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Van Westendorp's Price Sensitivity Meter

Understanding respondents perception of price

Updated at 2019-06-26 16:57:51 UTC

This tutorial shows how to create a Van Westendorp price sensitivity chart in Protobi by using the cumulative line chart:

<img src="/uploads/upload/image/5200/direct/1569901782262-1569901782262.png" alt="Van Westendorp price sensitivity chart showing four colored cumulative distribution curves intersecting across a price range from style="width: 360px;" class="fr-fic fr-dib">,000 to $4,000. Two curves descend from 100% (blue and olive green), while two curves ascend to 100% (orange and dark red), creating characteristic intersection points that identify optimal pricing zones." style="width: 360px;" class="fr-fic fr-dib">

Background

The Van Westendorp Price Sensitivity Meter (PSM) is used in market research to summarize stated consumer price preferences. This analysis allows product managers to see the intersection between prices customers say are reasonable (they would likely purchase the product or service) and prices that they say are expensive (they would no longer be willing to pay, or "fall off").

Below is an example chart from the original article showing the four cumulative curves and highlighting the intersections:

[

](https://www.researchworld.com/a-new-approach-to-study-consumer-perception-of-price/ "A New Approach to Study Consumer Perception of Price")

Methodology

In order to gauge customers willingness to pay participants are asked "At what price do you think the product/service ..."

  • "is priced so low that it makes you question its quality?" (too cheap)
  • "is a bargain?" (good value)
  • "begins to seem expensive?" (expensive but would consider)
  • "is too expensive?" (too expensive)

The responses to each of these questions are plotted. The intersection of these questions at certain points can give marketers and analysts information on respondents perception of price.

Van Westendorp analysis identifies four intersections:

  • OPS "Optimal Price:" Too cheap and too expensive to consider intersect
  • IDP "Indifference Price:" Good value and expensive but would consider intersect
  • MGP "Marginal Point (cheap):" Too cheap and expensive but would consider intersect
  • MDP "Marginal Point (expensive):" Good value and too expensive to consider intersect

According to this methodology, the "Range of acceptable prices" is from MGP to MDP.

Create a Van Westendorp plot in Protobi

Identify the four questions in your survey corresponding to the four pricing questions and put them into a single group:

Protobi data view showing a pricing question group containing four sub-questions (price1 through price4) displayed in a 2x2 grid. Each question asks about price perception and displays frequency distributions as horizontal bar charts with percentages. The questions cover the Van Westendorp spectrum: too cheap to be credible, good value, expensive but would consider, and too expensive to consider.

Press the edit icon for the group and from the context menu select "Chart type...." In the chart dialog choose the cumulative line chart and show the legend:

Chart configuration dialog showing chart type and options selection. The cumulative line chart type is selected (highlighted in green) along with the legend option. The dialog displays a grid of chart types including core, paired, tornado, column, bar, line, pie, scatter, cumul, venn, cloud, and pmap, with additional chart options like stack, swap, legend, overall, reverse-x, and reverse-y below.

We now have the cumulative distribution for the four questions in a single chart:

<img src="/uploads/upload/image/5200/direct/1561568422742-chart-cumulative.png" alt="Cumulative distribution chart showing four ascending S-curves representing the pricing questions. All four lines rise from 0% to 100% across the price range from style="width: 360px;" class="fr-fic fr-dib">,000 to $4,000. The chart includes a legend identifying each line: Too cheap to be credible (blue), Good value (olive green), Expensive but would consider (orange), and Too expensive to consider (dark red)." style="width: 360px;" class="fr-fic fr-dib">

Now we need to reverse two of the lines so they are descending. Press the edit icon and from the context menu choose "Edit JSON...". In this dialog, add a new special attribute "reverse" and specify the keys corresponding to "Too cheap" and "Good value":

Voilá! You now have a Van Westendorp chart:

<img src="/uploads/upload/image/5200/direct/1561568469203-chart-cumulative-reversed.png" alt="Van Westendorp price sensitivity chart showing the correct configuration with two descending curves (Too cheap to be credible in blue and Good value in olive green starting at 100%) and two ascending curves (Expensive but would consider in orange and Too expensive to consider in dark red starting at 0%). The curves intersect at multiple points across the style="width: 360px;" class="fr-fic fr-dib">,000 to $4,000 price range, forming the characteristic Van Westendorp pattern." style="width: 360px;" class="fr-fic fr-dib">

You can hover over the intersections to get the corresponding prices:

<img src="/uploads/upload/image/5200/direct/1561568490689-chart-final.png" alt="Van Westendorp chart with interactive tooltip displayed, showing hover functionality at an intersection point. The tooltip displays "24%" for "Good value" at price " style="width: 360px;" class="fr-fic fr-dib">448". The chart shows all four curves with their intersections, demonstrating how users can explore specific data points by hovering over the lines." style="width: 360px;" class="fr-fic fr-dib">

It is possible to extend this analysis as well as implement other pricing visualizations in Protobi. Contact Protobi support to discuss your project.

Source: VanWestendorp, P. (1976), “NSS-Price Sensitivity Meter (PSM) – a new approach to study consumer perception of price,” Proceedings of the ESOMAR Congress, Venice. https://rwconnect.esomar.org/a-new-approach-to-study-consumer-perception-of-price