The Van Westendorp Price Sensitivity Analysis (PSA) determines a range of acceptable prices and an optimal price point based on an analysis of price/value ratings obtained from consumers. Key data analyzed is from responses to questions about what prices for a product or service are considered too high or too low. Plotting this information onto Price Maps shows high/low price thresholds as well as the price point considered optimal.
Van Westendorp Analysis
The Van Westendorp Price Sensitivity Analysis (PSA) is a technique for gauging consumers price expectations for a finished product, often an existing product in an established category. It enables the marketer to see a range of prices that might be appropriate, and to see the fall off in consumer interest that occurs as price rises. It has been deployed widely across many CPG and non-CPG products. It can be particularly useful if the marketer is contemplating a change in pricing, or wants to understand consumer perceptions of own products vs. a competitorâ€™s products.
A simple and easily executable method, the first step in the PSA is to ask respondents the following four price-related questions:
- At what price do you begin to perceive the product as so expensive that you would not consider buying it? (Too expensive)
- At what price do you begin to perceive the product as so inexpensive that you would feel that the quality cannot be very good? (Too inexpensive)
- At what price do you perceive that the product is beginning to get expensive, so that it is not out of the question, but you would have to give some thought to buying it? (Expensive)
- At what price do you perceive the product to be a bargain â€“ a great buy for the money? (Inexpensive)
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