Van Westendorp Price Sensitivity Meter

Overview

Van Westendorp PSM uses four price perception questions to identify an acceptable price range through intersection analysis. Produces: Point of Marginal Cheapness (PMC), Point of Marginal Expensiveness (PME), Indifference Price Point (IPP), and Optimal Price Point (OPP). Requires survey data from 100+ respondents.

When to Use

Trigger conditions:

• Setting initial price for a new product or service
• Identifying the acceptable price range from consumer perception
• Quick pricing research without complex experimental design

When NOT to use:

• When you need to measure attribute trade-offs (use conjoint analysis)
• When you need demand curve estimation (use price elasticity)

Algorithm