Van Westendorp Method

The Van Westendorp method (also Price Sensitivity Meter, PSM) is a survey technique for deriving acceptable price ranges. Instead of asking "what would you pay?" directly, it asks four questions about price perception and derives an accepted price range from the answers.

The four questions

For a concretely described product, you ask your target customers:

1. At what price would the product be so cheap that you would doubt its quality?
2. Up to what price would it be a bargain?
3. At what price does it start to feel expensive but still acceptable?
4. At what price would it be so expensive that buying it is out of the question?

Plotting everyone's answers as curves, the intersections yield an acceptable price range and an indifference point.

Strengths and limits for founders

The method is easy to run and gives you an initial read on where your market's price perception sits, even with small samples. Its limits: respondents answer hypothetically (people pay differently than they answer), and in B2B with few, heterogeneous customers the curves need careful reading. Treat the result as one signal for your pricing corridor, not as the final answer.

The free Van Westendorp tool creates such a survey in a minute and draws the chart automatically. In the 9-step process, signals like these feed into step 6 (price boundaries).