Value based Pricing: A Research on Service Sector Using Van Westendorp Price Sensitivity Scale

Abstract

One of the significant features of modern marketing is its consumer-oriented approach. Because of the multiple effects of pricing decisions, the importance of the consumer-oriented approach increases. Accordingly, business organizations have to take into account consumers’ perception in their pricing decisions. Van Westendorp Price Sensitivity Meter is one of the price sensitivity methods, which is used to measure price sensitivity of consumers. The responses of four questions in the scale are displayed graphically using plots of cumulative percentages for each question in Van Westendorp PSM. Three important findings related with pricing can be obtained by this method. These are Optimal Price Point, The Range of Acceptable Price and Indifference Price. In this study, the prices are listed as: optimal price 360 TL, indifference price 345 TL and the range of acceptable price 320 TL - 385 TL. These findings show that the price sensitivity of the university students on private dormitories is high.

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