<\/p>\n

This is one of the most common questions asked, particularly when configuring a new product.<\/p>\n

The ‘right ‘ price will be the pricing model that delivers superior value to customers while delivering optimal returns to the seller.<\/p>\n

Developing a pricing model involves a series of strategic and market driven choices. Packaging, high Vs Low, the channels used, marketing collateral deployed, shape of your business model, identification of your ideal customer, and a host of other factors that make up the ‘marketing mix’.<\/p>\n

However, despite most of us knowing these things, typically price is set on a cost-plus basis, mixed with what others are charging for the same or similar\/substitute product.<\/p>\n

For an entirely new product, it is a guessing game that has potentially serious consequences. At one end you kill the product, at the other, you leave money on the table.<\/p>\n

Dutch economist Peter van Westendorp introduced a method that ended up being named for him in 1976. It has been used sparingly since, but not as widely as it should be.<\/p>\n

It is a simple and reasonably reliable method to determine the ‘right’ price for a product or service.<\/p>\n

There are four questions that will set your price ‘guidelines\u2019:<\/p>\n

\n
• At what price would it be so cheap that you would question quality?<\/li>\n
• At what price would you consider the product to be a bargain?<\/li>\n
• At what price would you start to think the product is getting expensive, but you still might consider buying it?<\/li>\n
• At what price would you consider the product to be too expensive, and you would not buy it?<\/li>\n<\/ul>\n

  Analysis of the responses will give you the point at which you are attracting the most customers who make the trade-off between buying intention, price, and quality perceptions. Putting this on a simple two-dimensional chart makes explanation easy.<\/p>\n

  Header courtesy Wikipedia<\/em><\/p>\n

   <\/p>\n

   <\/p>\n","protected":false},"excerpt":{"rendered":"

    This is one of the most common questions asked, particularly when configuring a new product. The ‘right ‘ price will be the pricing model that delivers superior value to customers while delivering optimal returns to the seller. Developing a pricing model involves a series of strategic and market driven choices. Packaging, high Vs Low, […]<\/p>\n","protected":false},"author":1,"featured_media":12303,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[57258971,7094],"tags":[8260,298909,393245,140198,57258963,166429,57258962,2267523,57258966,57258959,56490,8553,6636],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.strategyaudit.com.au\/wp-content\/uploads\/2024\/03\/Van-Westendorp-price-sensativity-model.jpg?fit=1024%2C744&ssl=1","jetpack-related-posts":[],"jetpack_shortlink":"https:\/\/wp.me\/p5fjXq-3cn","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/posts\/12299"}],"collection":[{"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/comments?post=12299"}],"version-history":[{"count":1,"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/posts\/12299\/revisions"}],"predecessor-version":[{"id":12305,"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/posts\/12299\/revisions\/12305"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/media\/12303"}],"wp:attachment":[{"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/media?parent=12299"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/categories?post=12299"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.strategyaudit.com.au\/wp-json\/wp\/v2\/tags?post=12299"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}