The Price Sensitivity Meter (PSM) was developed by the Dutch economist Van Westendorp
in 1976.
The PSM is most suitable for the determination of the price bracket of new products and services. Whilst the PSM can be used in early phases of product development in particular, to reveal price thresholds and to check whether there are enough potential buyers in the targeted price segment, it is somewhat less suitable for precise price recommendations.
The aim of the PSM is to use four questions to determine the acceptable price bracket and eventually to identify an optimum price.