The Van Westendorp Pricing Model for Associations
The following is an excerpt from our book, Pricing for Associations, available now on Amazon.
Embarking on the journey of pricing a product requires a nuanced understanding of how your audience perceives its value. The Van Westendorp Pricing Model, a powerful tool in the realm of pricing strategy, allows associations to gauge audience preferences without imposing preconceived notions. In this article, we delve into the purpose, methodology, and application of the Van Westendorp model in an open-ended pricing survey.
Understanding the Van Westendorp Model
Named after its creator, Peter Van Westendorp, this model is a survey-based approach designed to explore the perceived value of a product or service by asking respondents a set of four open-ended questions. Unlike traditional surveys that impose a predefined price range, Van Westendorp encourages participants to express their perceptions freely.
The Purpose of the Van Westendorp Survey
The primary goal of a Van Westendorp survey is to understand how respondents perceive the value of a product, uninfluenced by predetermined prices. For associations, this approach is invaluable, especially when introducing new products or upgrading existing ones. By allowing respondents to articulate their perceived value, associations gain insights that directly inform the subsequent pricing strategy.
Starting Without a Price
One of the unique aspects of the Van Westendorp model is the absence of a predetermined price point. Associations refrain from introducing their own suggested price, ensuring that respondents aren't influenced but instead provide unbiased feedback based on their understanding of the product, often garnered from demos or videos.
Template for a Van Westendorp Survey:
Introduction:
Brief explanation of the purpose.
Assurance of confidentiality.
Personal Information:
Name
Email
May we follow up?
Demographic Questions (Years in the industry, Membership tenure, etc.)
Van Westendorp Questions:
At what price do you feel the product is so expensive that you would not consider buying it? (Too Expensive)
At what price do you feel the product is priced so low that you would question its quality? (Too Cheap)
At what price do you feel the product is starting to get expensive and you would have to think twice before buying it? (Expensive/High Side)
At what price do you feel the product is a bargain and a great buy for the money? (Cheap/Good Value)
Special Considerations:
Tailor demographic questions to align with the nature of the product (Membership, Education, Certification, Event Sponsorship).
Here is a visualization of our own survey templates:
Analyzing Van Westendorp Results
The collected responses are plotted on a graph, known as the Price Sensitivity Meter. The intersection points of these curves reveal the optimal price range, guiding associations towards a price that resonates with their audience's perceived value. The following is an example of one set of results, which can then be used to inform the second survey we recommend conducting - Conjoint Analysis.
The Van Westendorp Pricing Model empowers associations to navigate the delicate balance between value and price without imposing preconceptions. By employing this open-ended survey, associations can tap into the authentic perceptions of their audience, forging a path toward a pricing strategy that harmonizes with the perceived value of their products.
