Tag Archives: market research

How to Graph Van Westendorp Data

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I’ve never seen an easy resource on this before, so here you go: How to graph Van Westendorp data to come up with a graph like the one below.

Van Westendorp pricing (the Price Sensitivity Meter) - 5 Circles Research
Note: Van Westendorp is sometimes referred to as a standard price sensitivity analysis.

If you’re doing this sort of thing all the time, you probably have a macro or some template for running these quickly. But I get lots of questions from people doing this for school, or for one report—this walk-through is designed to meet those kinds of needs.

Fist, I’m assuming you’ve asked all the right questions in your survey. But just in case, here are the four questions asked in a Van Westendorp question set:

  • At what price would you think product is a bargain – a great buy for the money
  • At what price would you begin to think product is getting expensive, but you still might consider it?
  • At what price would you begin to think product is so inexpensive that you would question the quality and not consider it?
  • At what price would you begin to think product is too expensive to consider?

When your survey is done, download your raw data into Excel or CSV. Copy-and-paste the four columns containing the answers to the four Van Westendorp questions onto a separate sheet. Start the paste in column B. Make sure the question labels are in the first row and in the same order as above (“a bargain” on the left, “so inexpensive” on the right). See image below:

The left-to-right order of the columns here is important.

Separate each of the four columns by inserting one column in-between them, like in the image below.

An empty column between each column with data.

Select cell B1, then click Data>>Filter. Then sort smallest-to-largest. Then select B1 again and de-select filter. Select cell F1 and do the same thing. Columns B and F should then be sorted smallest-to-largest.

Now do the same things for columns D and H. Select cell D1, then click Data>>Filter. Then sort smallest-to-largest. Then select D1 again and de-select filter. Select cell H1 and do the same thing. Columns D and H should then be sorted largest-to-smallest.

(The reason for doing this one column at a time, with a blank column in between, is to make sure we’re only changing one column at a time.)

Remove all the blank in-between columns, so that only columns B, C, D and E have data.

Begin numbering each row in column A, starting at A2. Fill the entire column until every row with data has a number. Each row should contain data in all of columns A, B, C, D and E.

Things should now look like this:

Columns B and D sorted smallest-to-largest. Columns C and E sorted largest-to-smallest.

Now add a blank column between A and B. In the new blank cell B2, paste this formula:

=A2/counta(A:A)

Then drag this down to the bottom of your sheet — to the last row containing any data. Then highlight this column (B) and convert to Percent Style. Your sheet should now look like this:

Cell B1 should be the smallest value in this column. The last cell in B with any data should be 100%.

Highlight columns B through F, then click Insert and create a Line graph. The graph should generate and look like this (I renamed mine):

I renamed this before sharing here. Yours will, of course, say “Chart Title” at the top.

Now, the goal with a Van Westendorp is to highlight the overlap in the middle. So shrink the data selection of your graph in order to make this gap easy to see. You can do that by dragging the top and bottom of your graph’s data selection so that the gap becomes larger. That’s what I did in the image below:

The arrow here points to the range of acceptable prices.

I’m not going to go into any more detail about how to interpret this graph. If you’re here learning how to graph is, I’m assuming you know why you’re doing this in the first place.

So that’s it! As always, let me know if you have any questions. For more on market research, generally, see my resource for startups.

More Than a Dream

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Many startup founders go into business to “follow a dream.”

That’s fine, and most entrepreneurs start there. But actually growing a business is less a matter of passion+innovation and more a matter of calculated trial-and-error.

The “dream” is important, but it needs to be wide enough to encompass any means of making things happen — even the kind of tedious work many thought they left behind when they set out on their own.

Surveying your target market is one of those tedious things. And it’s tough — the LAST thing many founders want to hear from consumers is what they’re selling isn’t in demand. But it’s better to LEARN the hard way than LOSE the hard way. And it’s rare, in my experience, that an entrepreneur with enough wherewithal to set out on his/her own is 100% off-the-mark when it comes to forecasting consumer demand.

I’ve seen hundreds of consumer surveys come back negative for a startup, but I can’t remember a single one that spelled complete doom for an idea. Most often, bad feedback can be addressed with doable changes to a product or its branding.

Be vigilant about connecting with consumers. Don’t be scared to ask the hard questions.

Your future self will thank you!

My new course: How to Run a Market Research Survey

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You have a product idea, but will it sell? Is it something people want? How much would they pay?

Rather than trust your gut, get hard answers to these questions (and others) from real people in your target market.

My new course at Highbrow will teach you exactly how to run an online market research survey for any product or service idea—a survey that empowers you with data-driven insights about how to turn your idea into a real business concept that consumers (and investors) will love.

I had fun putting this together, and I like Highbrow’s model. It’s free for first-time Highbrow users, so give it a try!

This is designed for anyone with a startup or product/service idea they’d like to bring to market. But in particular, it’s going to be especially valuable for startups trying to woo investors. Because like it or not, investors are going to want to see figures—your target market’s demand, willingness to pay, use of substitute products, etc.

My new article, plus working slower

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I have a new piece at Startup Grind.  In it, I break down the essentials of designing a basic market research survey for a product or service idea.

Quantitative market research (i.e. surveys) is a great way to validate a product or service concept. Further, investors are impressed if you can show them hard data—real opinions from real people (not just your friends) about your concept.

Key here is to get your concept description right. Ideally you can test more than one. Just remember that your respondents aren’t telling you how they feel about your product, but how they feel about the product you described in the survey.

In other news

Here’s a photo of my son from Halloween. Just had to share. Can he get any cuter? He loved Halloween—fun to be outside trick-or-treating, especially now that the weather is nicer.

The cooler weather energizes me. Summer was hot. Florida is beautiful, but getting used to the heat will take some time, I think. As in, a few years. What I have learned is to stay cool in Florida weather, it’s important to relax and slow down.

That sounds cliche, or maybe odd, but it’s true quite literally. Moving fast or stressing out raises your blood pressure and makes you warmer. Combined with 100-degree heat and high humidity, that’s a recipe for an uncomfortable afternoon going to lunches and meetings with clients.

Relax and slow down to stay cool. The same is true in business.

Over the past 18 months, the dictum “Work smarter, not harder” (which, to be more accurate, ought to read “Work smarter, not faster”) has come to mean a lot. I’ve never regretted slowing down, taking an hour off here and there to reflect and strategize. To “work smarter.” It boosts the return on my working hours.

Think about it this way: The faster you work, the more mistakes you’ll make. This doesn’t just mean errors in your code or typos in your slide decks, but also to your overall strategy. Taking on work too quickly—before really thinking about the rate, the time, the investment, the return—is a mistake, and it hurts you big-time. More than anything, really.

You can work 60+ hours a week on fun projects for awesome clients at 10% margin, but at the end of the week, you’re no better off than someone working for 30% margin for 20 hours total. Or just 12 hours at 50% margin.

Yes, working at break-even can be smart, if you have a very specific plan for leveraging this work to get better deals in the near future. But I’ve found many people—fledgling freelancers especially—who work at break-even do not have a specific plan. They work week after week for almost nothing, jumping on every opportunity to earn revenue, then burn out and call it quits after earning unjustifiably low profits.

So to succeed and stay cool in business, slow down and relax. Think strategically. Build slowly. And take it easy to keep good perspective. This advice may be laughably fundamental, but I make this mistake all the time, and I’m well past the fledgling freelancer phase of my business.