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Van Westendorp Pricing Technique

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Van Westendorp Pricing Technique

The Van Westendorp pricing techniqueis used to determine the optimal price point for a product. Typically, open questions which ask a consumer how much they would be willing to buy for a product produce inappropriately low prices as people tend to give the lowest price point at which they would consider purchasing a product. The concern here is that, in reality people will not purchase products that are deemed too cheap as there will be a concern that the product will be of poor condition.

In order to overcome this and determine a more realistic price point, respondents are asked four questions relating to price, which are as follows:

1)   At what point is the product so expensive that you would not consider buying it?

2)   At what price is the product so inexpensive that you would you feel the quality of the product is of inferior quality?

3)   At what price would you consider the product to be getting expensive to the point that you not refuse to buy it, but would have to give serious consideration before doing so?

4)   At what price would you consider the product to be great value for money?

As the questions would suggest, the Van Westendorp pricing technique is best used when applied to a product within an established market. This is because consumers will have an idea about what products of this type normally cost which will lead to them giving more realistic responses to the above questions. Moreover, prior to asking the above questions, participants should be given a detailed but digestible description of the product or service so that they have a clear idea as to what they are providing prices for.

Once the fieldwork has been completed and all results are in, the results are plotted into a graph and the analysis phase of the Van Westerndorp pricing technique can start. The points at which these lines intersect determine the optimal pricing ranges.

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