research-methods

The Van Westendorp survey identifies the acceptable price range for your product.

Pricing Research Methods

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Van Westendorp Price Sensitivity Meter

The Van Westendorp survey identifies the acceptable price range for your product.

The Four Questions

Ask each respondent:

  1. "At what price would you consider [product] to be so expensive that you would not consider buying it?" (Too expensive)
  2. "At what price would you consider [product] to be priced so low that you would question its quality?" (Too cheap)
  3. "At what price would you consider [product] to be starting to get expensive, but you still might consider it?" (Expensive/high side)
  4. "At what price would you consider [product] to be a bargain—a great buy for the money?" (Cheap/good value)

How to Analyze

  1. Plot cumulative distributions for each question
  2. Find the intersections:

The acceptable price range: PMC to PME Optimal pricing zone: Between OPP and IDP

Survey Tips

Sample Output

Price Sensitivity Analysis Results:
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Point of Marginal Cheapness:  $29/mo
Optimal Price Point:          $49/mo
Indifference Price Point:     $59/mo
Point of Marginal Expensiveness: $79/mo

Recommended range: $49-59/mo
Current price: $39/mo (below optimal)
Opportunity: 25-50% price increase without significant demand impact

MaxDiff Analysis (Best-Worst Scaling)

MaxDiff identifies which features customers value most, informing packaging decisions.

How It Works

  1. List 8-15 features you could include
  2. Show respondents sets of 4-5 features at a time
  3. Ask: "Which is MOST important? Which is LEAST important?"
  4. Repeat across multiple sets until all features compared
  5. Statistical analysis produces importance scores

Example Survey Question

Which feature is MOST important to you?
Which feature is LEAST important to you?

□ Unlimited projects
□ Custom branding
□ Priority support
□ API access
□ Advanced analytics

Analyzing Results

Features are ranked by utility score:

Using MaxDiff for Packaging

| Utility Score | Packaging Decision | |---------------|-------------------| | Top 20% | Include in all tiers (table stakes) | | 20-50% | Use to differentiate tiers | | 50-80% | Higher tiers only | | Bottom 20% | Consider cutting or premium add-on |

Willingness to Pay Surveys

Direct method (simple but biased): "How much would you pay for [product]?"

Better: Gabor-Granger method: "Would you buy [product] at [$X]?" (Yes/No) Vary price across respondents to build demand curve.

Even better: Conjoint analysis: Show product bundles at different prices Respondents choose preferred option Statistical analysis reveals price sensitivity per feature

Usage-Value Correlation Analysis

1. Instrument usage data

Track how customers use your product:

2. Correlate with customer success

3. Identify value thresholds

Example Analysis

Usage-Value Correlation Analysis:
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Segment: High-LTV customers (>$10k ARR)
Average monthly active users: 15
Average projects: 8
Average integrations: 4

Segment: Churned customers
Average monthly active users: 3
Average projects: 2
Average integrations: 0

Insight: Value correlates with team adoption (users)
        and depth of use (integrations)

Recommendation: Price per user, gate integrations to higher tiers