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Van Westendorp shows the range of prices buyers see as fair for your product, and where it starts to look too cheap or too expensive. Gabor-Granger asks whether they would buy at set prices, so you can see how demand falls as the price goes up.
too cheap=too expensive
The problem
Competitor prices and cost-plus sums tell you where the market sits. They do not tell you how your buyers will react to your product. Price it too low and you leave money behind, and the product can look cheap. Price it too high and people walk away before they try it. A pricing study puts the question to the people who buy the category, with your product in front of them.
At what price would it be so cheap that you would doubt its quality?
At what price would it feel like a great buy for the money?
At what price would it start to feel expensive, so you would think twice?
At what price would it be so expensive that you would not consider it?
The four prices must rise in that order. Answers out of order are left out and counted.
Play with the model
Each line is the share of buyers who give that answer at that price. Move the marker to read them, switch the group to see who accepts more, then open the demand curve.
Range: Van Westendorp
Or drag across the chart. Switch the group to see who accepts a higher price.
Demand: Gabor-Granger
Pick a tested price. Revenue is price times the share who would buy.
Drawn on the worked example further down: Example: pricing a new cold brew can
The optimal price point balances objections. It is not a revenue forecast.
People tend to overstate what they would pay, so compare prices with each other, not as a sales forecast.
Want price weighed against features or rival brands? A different method fits better, and we will tell you so.
In CatalyseAI today
The four Van Westendorp questions and buying intent at a price are ready-made templates in the Pricing group of CatalyseAI, and every report compares up to five audience groups with significance markers.
How the model works
The product, the size or plan, and who buys it. Bring candidate prices if you have them. If you do not, we start by finding the range.
The brief
Product12 oz cold brew can
Sold inUS grocery stores
BuyersBought ready-to-drink coffee in the past three months
Candidate pricesFive shelf prices, or none yet
Van Westendorp when you need a range. Gabor-Granger when you have a few candidate prices and want demand at each one. Both in one survey when you need both, with the open price questions first, so no price we show sways the answers.
We screen for people who buy the category. Each person sees a clear description or image of the product, with the unit being priced spelled out, before any price question.
Question 1 of 4
At what price would it be so cheap that you would doubt its quality?
$
Fieldwork runs with category buyers from our own PocketsFull panel.
Category buyers from our own PocketsFull panelScreened first: only people who buy the category answer
You get the acceptable range, the price points inside it, demand at each tested price and the price where revenue peaks, with cuts by the groups you care about.
The range, the points inside it, demand at each price and the revenue peak
The deliverables
Every CatalyseAI report downloads in these formats.
The four Van Westendorp lines on one chart, with each crossing point marked and named.
The span from the point where the product starts to look too cheap to the point where it gets too expensive for most buyers.
The share who would buy at each tested price, and price times demand, so you can see which tested price brings in the most revenue.
Compare up to five audience groups side by side, such as current customers and non-customers, with significance markers on the differences.
The full report as a PowerPoint deck, plus an Excel workbook and raw CSV data.
The terms, in plain words
Worked example
A beverage brand plans a 12 oz cold brew can for US grocery stores. The study screens for adults who bought ready-to-drink coffee in the past three months. Each person sees the can and a short description, then answers the four Van Westendorp questions. Next they see five candidate shelf prices, one at a time, and say how likely they would be to buy at each. The report shows the range buyers accept, where demand starts to drop fastest, and whether people who already buy cold brew accept a higher price than people who mostly buy iced coffee.
FAQ
Van Westendorp when there is no clear reference price and you need a range, which is common early on. Gabor-Granger when you have candidate prices and want to know how many people would buy at each one. Many studies use both: the range first, then demand at prices inside it.
Not always. People tend to overstate what they would pay, and a pricing exercise shows one product on its own, without rivals beside it. Use the results to compare prices with each other, not as a sales forecast. If price has to be weighed against features or competing brands, a different method fits better, and we will tell you so.
A common guide is 200 to 300 valid answers for each group you want to read on its own. A study that compares two groups needs more people than one that reads the total. We suggest a size for your case before fieldwork starts.
The four Van Westendorp prices must rise in order: too cheap, bargain, getting expensive, too expensive. Answers out of order are left out, not re-sorted, and the report says how many were removed.
Yes. A concept test can carry an optional price question, so you see how each idea holds up once a price is shown. A full pricing study goes further, with a range and a demand curve.
Related
Tell us what you are pricing and who buys it. We will suggest the method, the audience and the sample size before anything goes into field.
Nearest office: Orlando, FL (corporate office)