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The Van Westendorp Price Sensitivity Meter (PSM) is a non-parametric chart
used to summarize stated consumer price preferences. 
It allows product managers to see the intersection between prices customers perceive as
good value versus prices customers perceive as expensive.

<img src="/images/tutorial/vanwestendorp/chart-final.png"
style="width:360px; max-width:360px; display: block;vertical-align:top">
Here's how to create it in Protobi using cumulative line charts...

<h2>Methodology</h2>

In order to gauge customers willingness to pay participants are asked "At what price do you think the
product/service ..."
<ul>
<li>"is priced so low that it makes you question its quality?" (Too cheap)</li>
 <li>"is a bargain?" (Good value)</li>
<li>"begins to seem expensive?" (Expensive but would consider)</li>
<li>"is too expensive?" (Too expensive)</li>
</ul>
The responses to each of these questions are plotted. The intersection of these questions at certain
points can give marketers and analysts information on respondents perception of price.

Below is a chart from the original paper <a href="#biblio-1">[1]</a>

<img src="/images/tutorial/vanwestendorp/original.png"
style="width:600px; max-width:600px; display: block;vertical-align:top">
Van Westendorp analysis identifies four intersections: 
<ul>

<li>OPP "Optimal Price Point", too cheap & Too expensive to consider intersect</li>

<li>IPP "Indifference Price": Good value & Expensive but would consider intersect</li>

<li>MGP "Marginal Point (cheap)": Too cheap & Expensive but would consider intersect</li>

<li>MEP "Marginal Point (expensive)": Good value & Too expensive to consider intersect</li>
</ul>

According to this methodology, the "Range of acceptable prices" is from PMC to PMC.

<h2>Caveats</h2>
Van Westendorp is a way to visualize stated perceptions of price.
Despite the name, the "Optimal Price Point" is not necessarily optimal in a microeconomic sense
of mathematically optimizing profits or other metrics. As even the original 
article points out, "There is certainly not yet a well developed theory behind PSM".

<h2>Van Westendorp plot in Protobi</h2>

Identify the four questions in your survey corresponding to the four pricing questions and put them into
a single group:

<img src="/images/tutorial/vanwestendorp/prices.png"
style="width:600px; max-width:600px; display: block;vertical-align:top">
Press the edit icon for the group and from the context menu select "Chart type...". In the chart dialog
choose the cumulative line chart and show the legend:

<img src="/images/tutorial/vanwestendorp/chart-dialog.png"
style="width:360px; max-width:360px; display: block;vertical-align:top">
We now have the cumulative distribution for the four questions in a single chart:
<img src="/images/tutorial/vanwestendorp/chart-cumulative.png"
style="width:360px; max-width:360px; display: block;vertical-align:top">

Now we need to reverse two of the lines so they are descending. Press the edit icon and from the context
menu choose "Edit JSON...".
In this dialog, add a new special attribute <code>"reverse"</code> and specify the keys corresponding to
"Too cheap" and "Good value":
<img src="/images/tutorial/vanwestendorp/edit-properties.png"
style="width:360px; max-width:360px; display: block;vertical-align:top">

Voilá! You now have a Van Westendorp chart:
<img src="/images/tutorial/vanwestendorp/chart-cumulative-reversed.png"
style="width:360px; max-width:360px; display: block;vertical-align:top">

You can hover over the intersections to get the corresponding prices:
<img src="/images/tutorial/vanwestendorp/chart-final.png"
style="width:360px; max-width:360px; display: block;vertical-align:top">

[1]: VanWestendorp, P. (1976), “NSS-Price Sensitivity Meter (PSM) – a new approach to study
consumer perception of price,” Proceedings of the ESOMAR Congress, Venice.

<a href="https://rwconnect.esomar.org/a-new-approach-to-study-consumer-perception-of-price">https://rwconnect.esomar.org/a-new-approach-to-study-consumer-perception-of-price</a>

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