How to Price Your Offer Using Data, Not Gut Feelings
“Soooo, how much should we charge?”
Ask this question in a team meeting and you might be on Zoom for a long while.
Everyone has a gut feeling of what the right price for a new offer ought to be. But should you trust a gut feeling?
If you want to try a data-driven approach to pricing, I have something for you…
The Van Westendorp pricing model
I discovered the Van Westendorp pricing model when we launched the Building a Second Brain self-paced course at the end of 2022 and wanted to gauge what our audience would pay for such a course.
The goal of this pricing model is to identify a range of acceptable prices for a new product. (Btw, there’s another model called Gabor Granger more suited for existing products).
How it works
Basically, you send a simple survey to your target audience that describes your new offer in detail. The survey will then ask the participants, which price points they’d consider as…
too expensive and would not buy
expensive but would consider
bargain price
too cheap and would question the quality
Here’s an example from the SurveyKing site where the participants use sliders to pick the prices:
The results
The survey tool will automatically output a table such as the one below to showcase the results.
I won’t go into the weeds of what each price point means exactly (the survey experts explain it well here.)
Generally, you’ll get a good sense of what an optimal price point might be to maximize your revenue.
When we ran the survey, we added an additional open-ended question that I can highly recommend:
“If you could wave a magic wand and have this self-paced course include one feature, what would you choose?”
So when the results rolled in, we not only had an optimal price point, but also a big list of feature requests that could keep us busy for years.
How to run the pricing survey
We used SurveyKing to run this since the Van Westendorp model comes conveniently pre-configured within their survey builder.
It’s free to start, but you’ll have to pay to see all results. We signed up for one month and it was well worth it.
How to get more reliable responses
Describe your offer in detail so your audience can visualize what they would receive. If there’s too much room for interpretation, everyone will have a slightly different image in their head and evaluate it differently.
For example, phrase your question as:
❌ “How much would you be willing to pay for a self-paced course?”
✅ “How much would you be willing to pay for a self-paced course that includes [list the features]”
Now you should have a good idea of how to design and run your own Van Westendorp pricing survey.
One last thing: Treat the results as a suggestion, pick a price, then launch your offer. Remember that you can always adjust your price in the future. Nothing is locked in forever. But you have to test it!
