Unlocking pricing insights with a price sensitivity meter

Pricing is a critical element in any business strategy. Set it too high, and you risk alienating potential customers; set it too low, and you may undermine your profitability. Striking the right balance is a challenging task that can make or break a company’s success. One powerful tool that businesses can leverage to determine optimal pricing is the Price Sensitivity Meter (PSM).

Whether you are evaluating a service or product price change or launching a new service or product, you can quickly make the best price point. Cimigo price sensitivity test determines the acceptable price range and the optimal price for your brand.

What’s included:

The price sensitivity meter

Developed by Dutch economist Peter van Westendorp in the 1970s, it is a widely respected method for gauging consumer price sensitivity. Cimigo applies this simple price sensitivity meter to determine the acceptable price range and the optimal price for a particular product or service. Start using our price sensitivity solution by clicking here.

Four main questions of the model

In the price sensitivity survey, consumers are asked at which price the brand being tested is:

  • Too expensive: At what price do you perceive the product as too expensive to the point where you would not consider this product?
  • Too cheap: At what price do you perceive the product as too cheap to the point where you would feel that the quality cannot be very good?
  • Expensive: At what price do you perceive the product is getting expensive, but you would still consider buying it?
  • Cheap: At what price do you perceive the product to be a cheap – a great buy for the money?

Price sensitivity meter results

In this example, the optimal price is 38,500 ₫. The acceptable range is from 29,723 ₫ to 49,080 ₫. Beyond this range, too much demand is lost.

Price sensitivity meter example

The graph consists of four lines, with each representing one of the four main questions. The x-axis shows the price points, while the y-axis shows the proportion of respondents who chose each price point.

When these lines intersect, four pricing points are formed as below:

Optimal price point: Intersection of “too cheap” and “too expensive” lines, where customers feel that is the best price for them and they are most willing to buy.

Expected price point: Intersection of “cheap” and “expensive” lines, where customers expect that the price should be.

Low price point: Intersection of “too cheap” and “expensive” lines, where the product is perceived to lack quality relative to the price.

High price point: Intersection of “cheap” and “too expensive” lines, where the price outweighs the benefit.

The range between the low price and the high price is the acceptable price range.

If you have questions, please do contact Cimigo at ask@cimigo.com for support.

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Pricing is a critical element in any business strategy. Set it too high, and you risk alienating