Which Pricing Strategy Should You Choose for Your Product? A Van Westendorp Analysis
Finding the right pricing strategy for your business is like deciding on the right insurance policy. It requires a lot of research and thought to make the right decision.
If you are fighting tooth and nail on deciding the pricing strategy, this post is specially made for you! Let’s discuss Van Westendorp’s analysis in today’s post.
Why are pricing strategies important?
If you may ask what are pricing strategies and why is it even important, right from increasing your profits to giving an edge to your competitors, a proper content strategy in place can fix the missing piece in the jigsaw puzzle of your business.
Pricing strategy is important too:
- Increase the value of your brand
- Helps in balancing the supply and demand
- Attract more of your target audience
- Develop more high-quality products and services
- Helps in promoting loyalty of existing customers
The success of your product or service highly depends on pricing. Customer feedback through surveys, collecting data on them will be tiring and may seem never-ending.
And thus we have a savior named the “Van Westendorp pricing model” on board to rescue us from the never-ending process.
What is Van Westendorp’s analysis?
It is a survey technique that helps in deciding the optimal range of pricing for your business. The answers of the survey are plotted in a graph and it has 4 essential questions aka the van Westendorp pricing questions that need to be included by the end of the survey, which are,
- What would be the lowest price that you would start questioning the quality of the product?
- If you could bargain the price, what would be the starting point?
- What is the price that makes you feel the product is expensive?
- What price makes you consider the product or service is too expensive to afford?
Based on the options provided and the responses, the survey results are plotted in a graph to identify the ideal price of the product that was preferred by the ideal audience.
Understanding the emotions of your audience is the key to the success of your product.
If they found the product to be too cheap, they would probably end up questioning the valid offer you provide them with and doubt the quality of the product. And that eventually leads to a decline in sales. On the other hand, if the product lies on the side of being too expensive to afford, they’ll mostly skip from buying or even skip the thought of consideration.
So, Van Westendorp analysis helps you connect with your audience, get to know the buyer’s persona, and gain more insights into their emotions and sentiments.
Limitations of Van Westendorp analysis:
Van Westendorp's pricing model has its own sets of disadvantages; before concluding, look at the limitations it comes with.
- Most of the time, the respondents have no clear idea about the characteristics/ features of the product.
- Rather than focusing on other essential aspects, it only focuses on the price, which at times may lead to biased results as the outcome of the survey.
- The questions provided in the survey are easy to interpret, while the graph and the result of the survey are not!
- You can’t use this for a newly launched product as there is a lack of knowledge among the customers.
How to create Van Westendorp analysis?
To create a Van Westendorp survey,
- Add the 4 price inputs in the survey
- Add the maximum and minimum price range to the questionnaire
- Make the 4 questions mandatory to make the most out of the survey.
It is of utmost benefit if the number of respondents is more to get the correct average to find your optimal pricing range for your product.
Van Westendorp Curves:
To define the four pricing points, understanding these 5 types of curves is essential.
- Point of marginal expensiveness - the area between “too expensive” to “bargain.” The price exceeding this curve will make you lose your customers.
- Point of marginal cheapness- the area that lies between “expensive but would consider buying” to “too cheap.” Also, anything lower than this price will make the audience doubt the quality.
- Optimal point - Only a very few will stop themselves from purchasing as this price is the optimal range.
- Indifference price point- The area between “bargain” and “expensive but would consider.” This is the price range nearer to the optimal range and attracts more customers towards sales.
- The acceptable range of prices- This range attracts only a very few people as most people are more likely to consider this range too cheap to buy.
Every survey technique has its advantages and disadvantages. With proper research, you can find the right one that suits your needs. Try having a look at other posts of ours that give you deeper insights on the same!