The **[[Van Westerndorp Price Sensitivity Model]]** is a technique for determining the optimal price point (or range of acceptable price points) for a product or service. ^about The technique revolves around asking four **questions** about a product or service: > What price is so low that you consider it '**too cheap**' and therefore low quality? > At what price do you start considering it '**a bargain**'? > At what price do you start considering it '**getting expensive**'? > What price is so high that you consider it '**too expensive**' irrespective of its other qualities? Each of these questions will yield a distribution of percentage of respondents (as the dependent variable or y-axis) against the price (as the independent variable or x-axis), giving rise to four key insights: > **Point of Marginal Cheapness (PMC)** - The point at which the the 'too cheap' and 'a bargain' lines cross, indicating the lowest price at which the product should be priced. > **Point of Marginal Expensiveness (PME)** - The point at which the ''getting expensive' and 'too expensive' lines cross, indicating the highest price at which the product should be priced. > **Range of Acceptable Prices** - The range of prices (on the x-axis) between the PMC and the PME. > **Optimal Price** - The point at which the 'too cheap' and 'too expensive' lines cross, which is notionally near the middle of the 'Range of Acceptable Prices'.