Van Westendorp for Pricing Research (Survey Guide)

What is a Van Westendorp?

A Van Westendorp is a survey method used to measure a product’s optimal price. Known specifically as the Van Westendorp Price Sensitivity Meter, or sometimes just VM PSM for short, this survey method shows you how price changes impact your customers’ willingness to pay for your product.

Why people use Van Westendorp surveys for pricing research

There are two main challenges when making pricing changes — how to avoid leaving money on the table by charging too low a price and how to avoid turning too many customers away by setting your price too high. Ideally you should find an optimal price point that generates the most revenue possible by balancing your rice with their willingness to pay.

How do you find this optimal price? You should not directly ask people a question like “how much would you pay for this product?” because this will produce unreliable answers — people tend to way overestimate or underestimate how much they’re willing to pay when presented with a vague hypothetical question like this.

The Van Westendorp survey gets around this limitation by focusing specifically on prices that would be considered “cheap” or “expensive”, giving respondents better context to help them more realistically consider their price expectations. Using their answers to these questions, the Van Westendorp survey shows you the price point that the fewest people said was either too cheap or too expensive → ie. the optimal price!

How does the Van Westendorp survey work?

The Van Westendorp survey asks four simple questions:

1. At what price would it be so cheap that you would question the product’s quality? → Too Cheap

2. At what price would you consider the product to be a great value bargain? → Acceptably Cheap

3. At what price does the product feel expensive but still within consideration? → Acceptably Expensive

4. At what price would this product become too expensive to even consider? → Too Expensive

By analyzing the answers submitted by a large group of participants to these four questions, the Van Westendorp method can figure out the optimal price point where these “cheap” and “expensive” expectations overlap.

For example, I ran a mock Van Westendorp survey using a 30oz Stanley Cup as the product example. To help you understand how the Van Westendorp graph works, lets first only include the data from the first question about prices that are ”Too Cheap” and plot them on the line graph like this:

The horizontal axis here shows the range of prices that were mentioned by respondents and the vertical axis shows the percentage of participants that said a price point was “too cheap”. For example, this graph tells us that:

• 100% of people agreed that a price of $1 or less indicates a low-quality Stanley Cup.

• 80% of people said that a price of $4 would be a signal of low product quality.

• Only 20% of people said that $13 was too cheap to consider buying.

• 0% said that a $28 price tag would indicate low product quality.

When we repeat this process for each of the four questions in the Van Westendorp survey, we get a graph that looks like the example below, with two “cheap” lines running from top left to bottom right. The two “expensive” lines run in the opposite direction, from bottom left to top right, because the logic is flipped (0% of people thought $1 was “too expensive”).

The main outputs of a Van Westendorp survey are the prices where intersections between these lines occur.

1. Optimal Price

The Optimal Price is where the lowest percentage of participants say the price is “Too Cheap” or “Too Expensive”. This is found at the intersection of the Too Cheap and Too Expensive lines on your Van Westendorp graph. In our Stanley Cup example, these lines intersect at ($26, 3%), which means that 3% of people said $26 is too cheap and 3% said $26 is too expensive. This means $26 is an optimal price for 94% - 97% of survey respondents.

2. Acceptable Price Range

Where the two cheap/expensive intersections occur (🟠), the gap between these two points is called the ‘range of acceptable price’ which shows the price range that most customers are likely to consider purchasing your product.

Pros and Cons of Van Westendorp Surveys for Pricing Research

Some factors to consider before jumping into your first Van Westendorp project…

Advantages

• Easy Setup → No advanced survey methodology to learn here, the Van Westendorp method requires just four simple number response questions and can be included as part of a normal survey with other questions too.

• Easy to Complete → Even a kid could accurately complete a simple Van Westendorp survey. According to Brian Balfour (founder of Reforge, the top professional development program in tech), the Van Westendorp method reduces the usual bias found in stated preference surveys “because it’s not a single question about a single point, but a number of questions that help you triangulate somebody’s true willingness to pay.”

• Easy To Analyze → You can turn your survey responses into a Van Westendorp graph using a simple spreadsheet template and identify your key prices visually; no data science or advanced skills required!

• Easy To Understand → The “optimal price” is where the highest percentage of people say the product is not too cheap or too expensive. This is easy for anyone to understand and it intuitively makes sense why this would be valuable as the main output from a pricing study.

Disadvantages

• Assumed Intersection → If you look at Van Westendorp surveys on Google Images, they always show an intersection between the “too cheap” and “too expensive” lines. This is not guaranteed, given the fact that an intersection is often caused by the answers of a very small percentage of respondents (which in itself could be considered a disadvantage of the VW method too). However, even without an intersection, you can still assume an “optimal range” between where Too Cheap hits 0% and Too Expensive leaves 0%.

• Unsuitable for Bundling → Respondents are better able to accurately consider their price expectations for a single product offering considered in isolation — whether this is one overall product or one specific feature. If you want to conduct a pricing study for a bundled product offer (ie. many products put together into one offer) or an offering that is made up of many features (like a pricing tier on a software product), you should consider using a marginal willingness to pay report from a conjoint analysis survey instead.

How To Create A Van Westendorp Survey (Simple Step-By-Step Guide)

Step 1: Survey

Start by creating a survey. I’ll be using OpinionX as my survey tool for these examples because OpinionX lets you create unlimited surveys with unlimited participants for free.

First I’ll add the four Van Westendorp questions to my survey, tailoring the wording as needed based on the product I want respondents to focus on:

1. At what price would it be so cheap that you would question this product’s quality?

2. At what price would you consider this product to be a great value bargain?

3. At what price does this product begin to feel expensive but still within consideration?

4. At what price would this product become too expensive to even consider?

I personally like to include an image of the product here. I also mix the order of the four questions so that they are not in a clearly ascending or descending order, which forces the respondent to consider each more carefully. Here’s an example of how your should look (it’s interactive, try completing it yourself)…

⬆️ This example is interactive, try it yourself! ⬆️
(survey via OpinionX)

Two key survey design considerations for Van Westendorp PSM willingness to pay studies that most people forget are:

(i) Segmentation

Are there ways that you will want to be able to filter your end results? For example, I need to be able to compare free users versus paying customers when I run a Van Westendorp survey with my own customers. A good Van Westendorp study does not just look at the overall results — it identifies which customer segment is willing to pay the most for your product.

Consider what customer segments you will want to filter or compare — a good starting point is to think about demographics (age, gender), firmographics (company size, department), or geographics (continent, city). If you’re running this research with existing customers, you can import this information as enrichment data from your CRM. If you don’t have this data, just add some basic multiple-choice questions to the end of your survey to collect it. OpinionX will automatically group people into segments using either of these methods, which you can use for filtering and comparison later on.

(ii) Identifiers

The best pricing research follows the Discovery Sandwich approach of using interviews to discover people’s opinions, surveys to validate this quantitatively, and interviews to dig deeper into your top insights. You should be able to identify your Van Westendorp respondents so that you are able to identify customers with the highest willingness to pay and invite them to in-depth interviews to understand more about why they consider your product so valuable.

You can either include an identifier question at the end of your survey to collect their email/name (ideally as an optional question to prevent a drop-off rate increase) or by importing your CRM data to your survey tool so that their identifiable data is linked to their Van Westendorp answers.

Step 2. Spreadsheet

Export your survey results and take them over to your spreadsheet tool of choice. I created a free spreadsheet template that you can copy/paste your Van Westendorp data into and it will automatically create the VW line graph for you. It can handle thousands of participants automatically and you don’t have to handle any formulas or math yourself. After you add your survey data, the spreadsheet template will look like this:

There are three sections to this template:

1. Automated Formulas → Don’t edit this section, it will adapt based on your survey data.

2. Survey Data Input → Paste your survey data here, each row should be one participant, and the data added to the four colored rows should be numerical (it won’t work if it is formatted as text).

3. Van Westendorp Graph → Once pasted, the graph will automatically update based on the data from the “Automated Formulas” section.

As you can see in the GIF below, everything updates automatically literally immediately when you paste data in using the right format (ie. just numbers in the four colored columns). Here’s an example of me copy/pasting the data directly from my OpinionX survey export.

You can access this free spreadsheet template here

Some notes about this template:

• This sheet is available in view-only mode.

• Before editing, you must click FILE → MAKE A COPY.

• Do not request edit access, make a copy instead.

• The sheet includes two tabs:

  • A blank template for you to use for your own survey data.

  • An example with 59 participants to show how a completed sheet should look.

If you use this spreadsheet in any public presentation or blog posts, pleeeeeeease attribute credit correctly and link to this blog post where you originally found it 🙏

To compare groups, filter your results to focus on just one group of participants and copy their answers into a copy of the same template. Here’s an example of a simple one-click filter on OpinionX. You can also define more complex segments using logical expressions on survey data or enrichment imports. Once a filter is applied, any exported data will match your segmentation configuration, making it an easy way to tailor the data you use for the spreadsheet template.

Create your own Van Westendorp survey on OpinionX today. You can create unlimited surveys with unlimited participants on OpinionX’s free tier. OpinionX is used by tens of thousands of companies for customer research, ranking user preferences, and conducting pricing studies like Van Westendorp surveys.

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About The Author:

Daniel Kyne is the Co-Founder of OpinionX, a free research tool for stack ranking people’s priorities — used by tens of thousands of teams to better understand what matters most to their customers. OpinionX comes with a bunch of research methods for pricing studies, including conjoint analysis and marginal willingness to pay reports. Give OpinionX a try for free!