The Van Westendorp method: price sensitivity research step by step
The Van Westendorp method (Price Sensitivity Meter) determines an acceptable price range from four questions about price thresholds asked of customers. The article describes the questions, how to read the four intersection points with a worked example, and the method's limitations.
Amounts and values in the examples are illustrative and show how the calculation works. In projects, we use the client's data.
Dominik Dębski · Lemur Media · · reading time: 4 min
Reviewed by Dominik Dębski, 1 November 2026
What is the Van Westendorp method?
The Van Westendorp method (Price Sensitivity Meter, PSM) is a survey in which respondents state four price thresholds, and the range of acceptable prices is derived from their distributions. The method was presented by Dutch economist Peter van Westendorp in 1976 at the ESOMAR congress. It is used when launching new products and reviewing price lists, when there is no data on sales at different prices.
Van Westendorp himself did not estimate demand. The extension described by D. Newton, J. Miller and P. Smith (1993) adds two questions about purchase likelihood at the "expensive" and "cheap" prices, which makes it possible to draw a revenue curve. Other pricing research methods include the Gabor-Granger method and conjoint analysis.
What questions are respondents asked?
Each respondent states four prices, and the results are presented as four cumulative curves. Before the questions, the respondent receives a product description so that everyone evaluates the same offer.
| Curve | Price stated by the respondent |
|---|---|
| Too expensive | A price so high that the product would not be considered |
| Too cheap | A price so low that quality would be in doubt |
| Expensive | A price at which the product starts to feel expensive, but purchase is still possible after some thought |
| Cheap | A price at which the product is a bargain |
The "too expensive" and "expensive" curves rise with price: they show the share of respondents for whom a given price exceeds their threshold. The "too cheap" and "cheap" curves fall: they show the share of respondents for whom the price is equal to or below their threshold.
How do you read the intersection points?
The four curve intersections define the lower and upper limits of acceptable prices, the optimal price and the indifference price. In the most common interpretation:
- Point of marginal cheapness (PMC): the intersection of the "too cheap" and "expensive" curves, the lower limit of the range.
- Optimal price point (OPP): the intersection of the "too cheap" and "too expensive" curves; as many people consider the price too low as consider it too high.
- Indifference price point (IPP): the intersection of the "expensive" and "cheap" curves; as many people consider the price cheap as consider it expensive.
- Point of marginal expensiveness (PME): the intersection of the "too expensive" and "cheap" curves, the upper limit of the range.
What does a worked example look like?
The example concerns a B2B SaaS subscription priced per user per month, surveyed among 200 respondents from the target group. The table shows the share of respondents on each curve at successive prices.
| Monthly price | Too cheap | Cheap | Expensive | Too expensive |
|---|---|---|---|---|
| PLN 50 | 40% | 90% | 5% | 0% |
| PLN 75 | 20% | 70% | 20% | 2% |
| PLN 100 | 10% | 50% | 25% | 10% |
| PLN 125 | 5% | 30% | 30% | 12% |
| PLN 150 | 2% | 15% | 45% | 15% |
| PLN 175 | 0% | 5% | 65% | 40% |
| PLN 200 | 0% | 2% | 85% | 70% |
The "too cheap" and "expensive" curves intersect at PLN 75 (PMC, 20% = 20%), "too cheap" and "too expensive" at PLN 100 (OPP, 10% = 10%), "expensive" and "cheap" at PLN 125 (IPP, 30% = 30%), and "too expensive" and "cheap" at PLN 150 (PME, 15% = 15%). The acceptable price range is PLN 75–150. The current price of PLN 89 is within the range and below the indifference price, so the company has room to raise it towards PLN 110–125, which should be confirmed by a test on new customers.
How do you prepare the survey?
The reliability of the result depends on respondent selection, the product description and logical checks on the answers.
- Selecting respondents from the target group, in B2B with a check on their role in the purchasing decision; for segment analysis we assume at least 100 responses per segment.
- A product description with the scope of features and the price unit, e.g. per user per month, net.
- Four questions in a fixed order, answered in Polish zloty.
- Removing inconsistent answers: the "too cheap" price must be lower than "cheap", "cheap" lower than "expensive", and "expensive" lower than "too expensive".
- Calculating the cumulative curves over a price grid and reading the intersections, including by segment.
The survey can be run separately for existing and potential customers. Existing customers know the product's value, while potential customers better reflect the conditions for winning new contracts.
What are the method's limitations?
- Respondents state thresholds but do not make a purchasing decision; the results must be compared with sales data.
- The method does not estimate demand or revenue at a given price; its extensions with purchase likelihood questions serve that purpose.
- The result depends on the product description and on whether respondents know the prices of alternatives.
- In B2B, the person completing the survey often does not decide on the budget, so respondent selection requires a check on job role.