Psm Analyzer

PSM Analyzer — Van Westendorp Price Sensitivity Analysis

A skill that enhances the pricing capabilities of value-assessor and pricing-simulator.

Target Agents

• value-assessor — Systematically analyzes WTP (willingness to pay)
• pricing-simulator — Incorporates PSM results into simulations

Van Westendorp PSM 4 Core Questions

Q1: "At what price would you consider the product too cheap, making you question its quality?"
    → Too Cheap (TC) curve

Q2: "At what price would you consider the product a bargain — a great buy for the money?"
    → Cheap/Bargain (C) curve

Q3: "At what price would you start to feel the product is expensive?"
    → Expensive (E) curve

Q4: "At what price would you consider the product too expensive to even consider?"
    → Too Expensive (TE) curve

PSM Analysis Method

Step 1: Data Collection

Respondents: 50-200 target customers
Format: Specific monetary amounts for each question
Prerequisite: Sufficient product/service description provided

Data Table:
| Respondent | Too Cheap | Cheap | Expensive | Too Expensive |
|-----------|-----------|-------|-----------|---------------|
| 1         | 5         | 10    | 30        | 50            |
| 2         | 3         | 8     | 25        | 40            |
| ...       | ...       | ...   | ...       | ...           |

Step 2: Cumulative Distribution Graph

X-axis: Price ($0 to maximum response price)
Y-axis: Cumulative percentage (0% to 100%)

TC (Too Cheap): Left-to-right cumulative (at or below percentage)
C (Cheap):      Left-to-right cumulative (at or below percentage)
E (Expensive):  Right-to-left cumulative (at or above percentage)
TE (Too Expensive): Right-to-left cumulative (at or above percentage)

Step 3: Intersection Point Derivation

4 Key Price Points:

PMC (Point of Marginal Cheapness):
  TC (Too Cheap) ∩ E (Expensive) intersection
  → Below this price, quality suspicion begins

OPP (Optimal Price Point):
  TC (Too Cheap) ∩ TE (Too Expensive) intersection
  → Minimum purchase resistance = optimal price

IPP (Indifference Price Point):
  C (Cheap) ∩ E (Expensive) intersection
  → Equal proportion cheap/expensive = market expected price

PME (Point of Marginal Expensiveness):
  C (Cheap) ∩ TE (Too Expensive) intersection
  → Above this price, churn increases sharply

Acceptable Price Range: PMC to PME

Gabor-Granger Supplementary Analysis

PSM Limitation: May differ from actual purchase intent

Gabor-Granger Question:
  "Would you purchase this product at [Price X]?" (Yes/No)
  → Repeat while varying price (from high to low or low to high)

Demand Curve Derivation:
  "Yes" percentage by price → Demand curve
  Revenue-maximizing price = Price x Purchase intent rate at maximum point

| Price  | Purchase Intent | Expected Revenue (per 100 people) |
|--------|----------------|----------------------------------|
| $10    | 90%            | $900                             |
| $20    | 70%            | $1,400 ← Maximum                |
| $30    | 40%            | $1,200                           |
| $40    | 15%            | $600                             |

Segment-Based PSM Analysis

Segment Classification Criteria:
  1. Company Size (SMB / Mid-Market / Enterprise)
  2. Use Case (Personal / Professional / Team)
  3. Existing Solution (New / Switching)
  4. Price Sensitivity Level (Low / High)

OPP Comparison by Segment:
| Segment    | PMC  | OPP  | IPP  | PME  |
|-----------|------|------|------|------|
| SMB       | $50  | $80  | $100 | $150 |
| Enterprise| $200 | $350 | $500 | $800 |

→ Basis for segment-based price differentiation

Pricing Structure Design Integration

PSM Results → Plan Design:

1. Free/Freemium: Below PMC
   → Quality-suspect price = remove entry barrier with free

2. Starter: PMC to OPP
   → Minimum price to optimal price

3. Professional: OPP to IPP
   → Optimal to market expected price

4. Enterprise: IPP to PME
   → Market expected to maximum acceptable price
   → Justified by additional value (support, SLA, customization)

PSM Report Template

## Price Sensitivity Analysis (PSM)

### Survey Overview
- Target: [Target customer description]
- Respondents: [N] people
- Survey Period: [Period]

### Key Price Points
| Point | Price | Meaning |
|-------|-------|---------|
| PMC | [$] | Minimum acceptable price |
| OPP | [$] | Optimal price |
| IPP | [$] | Market expected price |
| PME | [$] | Maximum acceptable price |

### Acceptable Price Range: [PMC] to [PME]
### Recommended Price: [OPP-based recommendation]

### Segment Analysis
[Segment-specific table]

### Pricing Structure Recommendation
[Plan-specific price proposals]