Pricing a new product is one of the toughest challenges for startup founders.
Get it wrong, and you risk losing customers or undervaluing your innovation.
The Van Westendorp Model is a fantastic tool to help navigate this tricky terrain.
It’s all about understanding how customers perceive your price.
This model was created by economist Peter van Westendorp and has been a game-changer since 1976.
It focuses on customer perception, which is crucial for any startup.
The model uses four key questions to get to the heart of pricing:
When is the price too high for you to consider buying?
When is the price so low that you question the quality?
When does the price start to feel expensive, but you'd still buy it?
When is the price a real bargain?
These questions help you see where your price should sit.
By plotting these responses, you get a clear picture of your pricing sweet spot.
You’ll find the Optimum Price Point where value and cost meet perfectly.
The model also shows you the range of acceptable prices.
This range is between the Point of Marginal Cheapness and Marginal Expensiveness.
So, why should startups care about the Van Westendorp Model?
First, it puts customer opinion front and centre, just like lean startup methods.
It’s flexible and works across different markets and customer groups.
The model helps you avoid pricing pitfalls that scare off customers.
Plus, it guides you in setting a smart pricing strategy from the start.
Here’s how to use the Van Westendorp Model in your startup:
Know your target market and who you’re surveying.
Craft a survey with the four key questions and add some background questions.
Use tools or software to plot the responses and find your key price points.
Test this price range in the market and tweak it as needed.
Make sure your pricing aligns with how you talk about your product’s value.
In the startup world, where being quick and customer-focused is key, the Van Westendorp Model is a lifesaver.
It helps you set a price that matches what your customers expect and are willing to pay.
With this model, you’re not just guessing—you’re making informed decisions.
It’s a straightforward way to find that perfect price point, build trust, and grow your business.
For any founder looking to nail their pricing strategy, the Van Westendorp Model is your go-to guide.
We look forward to building with you,
The foundercentre team
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