The “meter” is actually a very clever survey method which consists set of four questions asked of members of your target market. The questions hone in on different descriptors of where a particular price is in a potential buyer’s mind.
Here are the four questions (wording varies, but the following is typical):
- At what price would you consider the product to be so expensive that you would not consider buying it?
- At what price would you consider the product to be priced so low that you would feel the quality couldn’t be very good?
- At what price would you consider the product to be starting to get expensive, so that it is not out of the question, but you would have to give some thought to buying it?
- At what price would you consider the product to be a bargain or a great buy for the money?
Responses can be open-ended, but in most cases the respondent is given some means to adjust each price upward or downward to fit the appropriate descriptor.
The output is where it gets really cool.
The Van Westendorp output chart presents 4 lines representing each of the four constructs. The X axis represents price, and the Y axis represents the proportion of people who chose that price.
Two endpoints of acceptable price are chosen as follows:
- The place on the Y axis where the lines representing the low price options – let’s call them “priced too low” and “bargain” – meet is the lowest acceptable price.
- The place on the Y axis where the lines representing the high price options – let’s call them “too expensive” and “starting to get expensive” – meet is the highest acceptable price.
And there you have it – your acceptable price range!
The applications of this clever methodology are virtually unlimited.
If you’d like to learn more and see examples, there is a webinar from Survey Analytics on this very topic.