Expert user license required to use this research method with automated results calculation
1. Introduction
The Van Westendorp Price Sensitivity Meter (PSM) is a widely used market research method that helps organizations determine optimal pricing for products or services. By asking customers a series of price-related questions, the PSM identifies a price range that balances customer perception of value, affordability, and willingness to pay. The goal is to uncover the optimal price point and acceptable price range that maximizes sales potential without sacrificing customer satisfaction.
2. Solution Template
If you want to conduct research using Van Westendorp Price Sensitivity Meter in Survalyzer, we recommend to start with our preconfigured solution template. Using this template will allow you to analyze the results in a fully automated way.
Expert license required to use this template. Please reach out to your Account Manager or create a support ticket in case you want to use this template.
3. When to use?
The Van Westendorp PSM method is ideal for a variety of use cases, including:
- New Product Launch
Identify what price customers would find acceptable for a product or service that’s new to the market. - Price Adjustments
Evaluate whether current customers are comfortable with proposed price increases or decreases. - Market Expansion
Understand local pricing expectations when entering new geographic or demographic markets. - Product Bundling or Feature Changes
Determine price sensitivity when adding new features or creating bundles. - Competitive Benchmarking
Compare price perceptions between your product and competitors to identify competitive advantages.
4. How to Conduct PSM Research Using Survalyzer
Conducting a PSM study in Survalyzer is straightforward. Here’s a step-by-step guide:
- Start with our downloadable PSM Solution Template linked in section above. Use it as a starting point for your survey (recommended), or copy PSM section and report to your target survey.
- Inside you will find four key price questions, based on the Van Westendorp model:
- At what price would you consider the product so inexpensive that you would doubt its quality?
(Too cheap) - At what price would you consider the product a bargain?
(Cheap / Good value) - At what price would you start thinking the product is getting expensive, but still acceptable?
(Expensive but acceptable) - At what price would you consider the product too expensive and not worth buying?
(Too expensive)
- At what price would you consider the product so inexpensive that you would doubt its quality?
- Make sure you don’t change those questions variable names, because they are directly linked to PSM Results Report.
- Add all remaining survey content that you need to finish survey design.
- If you started with our solution template, remember to clean demo survey raw data before starting your own distribution.
- Collect responses.
5. How to Analyze and Interpret Results
Once responses are collected, Survalyzer’s PSM Results Report can help you interpret the results:
- Analyze the visualization of cumulative frequency curves based on 4 questions from the survey.
Each question in the survey becomes one cumulative frequency curve, which will help us determine target price points:- “Too cheap” curve
- “Bargain” curve
- “Getting expensive” curve
- “Too expensive” curve
- Identify key intersections
Focus on price points where the curves intersect. You can find calculated values in the table below the chart:
| Price Point | Definition |
|---|---|
| Point of Marginal Cheapness (PMC) | Intersection of “too cheap” and “getting expensive” |
| Point of Marginal Expensiveness (PME) | Intersection of “too expensive” and “bargain” |
| Optimal Price Point (OPP) | Intersection of “too expensive” and “too cheap” |
| Indifference Price Point (IPP) | Intersection of “bargain” and “getting expensive” |
- Determine the acceptable price range
The area between the PMC and PME gives you the acceptable price range. The OPP is typically considered the “sweet spot.” - Make pricing decisions
Use these insights to set, adjust, or communicate pricing confidently.
6. FAQ
Which interviews are considered for analysis?
All interviews with “completed” status are included in PSM Report Analysis.
Can I further change PSM Report, e.g. add additional filters, or analysis of other questions?
Yes, PSM Report is a regular Survalyzer Report of Dashboard type, which can be further modified. However, you need to have access to create and edit Dashboard Reports (Expert user license + account with Dashboard Extension).
How many respondents do I need for reliable PSM results?
We recommend at least 200 respondents for meaningful insights, though smaller samples may work for exploratory research.
Should I use a specific currency or price range?
Tailor the currency and price ranges to your target audience’s expectations to avoid confusion.
I cannot find or copy PSM Report.
You will find it inside our downloadable solution template above. If you want to copy this report to your actual survey, use “download” and “upload” report definition feature. If you don’t see it on reports overview list, contact our support to enable it.
I collected responses, but I don’t see any results in PSM Report
That could happen if you changed the names of questions variables related to PSM research. In order to fix that, follow the steps below:
1. Export full survey raw data to excel
2. Edit survey in survalyzer, change questions variable names to the same ones as in our solution template above.
3. Upload survey raw data back to the survey (only columns related to PSM questions + InterviewID column. See here more instructions related to importing survey raw data).