Price Sensitivity Meter (PSM) / Van Westendorp
How it works:
The Price Sensitivity Meter, also called Van Westendorp, is a method that directly measures customers‘ willingness to pay a certain price and their price sensitivity by asking a set of four questions about a product or service. This information can then be used to determine a price when sales are maximum, a reference price and a range of acceptable prices.
The Price Sensitivity Meter (PSM) is relatively simple to apply and does not take much time. That is why it can also easily be built into studies whose main focus is not on pricing.
- Definition of optimal prices for new products or services
- Adjusting prices for re-launches
To increase validity, this method of determining pricing is often used together with other methods (multi-method strategy).
Case studies on pricing research (Pricing – Price Optimization)
- Product and price optimization: Landline, Internet, mobile phone and additional services B2B > Further information
- Price optimization mobile telephony B2C > Further information
To find out more about the Price Sensitivity Meter (PSM) please contact us.