Four price perception curves reveal the optimal range
Van Westendorp Price Sensitivity Analysis (PSA) asks four questions: at what price is the product too cheap (making you think it's low quality)? At what price does it become a bargain? At what price is it expensive? At what price is it too expensive (you wouldn't buy it)? The answers trace four curves. 'Too cheap' rises as price rises (fewer people think it's cheap as price increases). 'Bargain' also rises. 'Expensive' rises faster. 'Too expensive' rises even faster. The intersection of 'too cheap' and 'too expensive' marks the sweet spot: the price band where the fewest people reject the product for being either suspiciously cheap or unaffordably dear. This range typically spans 15-30% of the median price.
Why Van Westendorp matters, and its limits
PSA is popular because it's simple, runs on large sample sizes, and correlates with real purchase behavior. The output is a defensible price point grounded in actual customer perceptions. However, it doesn't account for real demand curves (people saying they'd pay a price is not the same as buying at that price), competitive positioning, or cost structures. It's a starting point for hypothesis, not a final answer. Used in concert with willingness-to-pay studies, competitive benchmarking, and pricing experiments, PSA is a powerful anchor for pricing decisions.