Price Sensitivity Meter

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The price sensitivity meter is a popular set of questions designed to provide assistance in understanding the range of prices that can be relevant for a completely new product. There are a few minor variants, but the standard wordings are:

Q1. At what price would you consider this PRODUCT/BRAND to be so inexpensive that you would have doubts about its quality? [“Too cheap”]?

Q2. At what price would you still feel this PRODUCT/BRAND was inexpensive yet have no doubts as to its quality? [“Cheap”]?

Q3. At what price would you begin to feel this PRODUCT/BRAND is expensive but still worth buying because of its quality? [“Expensive”]?

Q4. At what price would you feel that the PRODUCT/BRAND is so expensive that regardless of its quality it is not worth buying? [“Too expensive”]? </pre>

The third of the questions can be interpreted as collecting the reservation price (see Phrasing the Question), with the other questions framing this last question in much the same way that asking people which animal best represents a brand frames the “why” question with Brand Personification question.

From-time-to-time the price sensitivity meter is used to generate price-demand curves and make predictions about sales at different price points. As the questions are clearly not incentive compatible and completely ignore the availability of substitutes, and predictions made using such a technique seem likely to have little prospect of being remotely accurate, except by chance.

Also known as

Van Westendorp's Price Sensitivity Meter

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