Price Sensitivity Meter (NMS)

Advanced probabilistic demand modeling. An alternative to Van Westendorp that calculates explicit buy probabilities at every price point.

Purchase Probability & Revenue

Revenue vs Probability

Balancing conversion rate with margin.

The Revenue Peak

The Blue shaded area represents Revenue. The highest point is your theoretical maximum.

Conversion Trade-off

To hit the revenue peak, you usually have to accept a lower conversion rate (Buy Prob) than maximum.

Execution Steps

This tool visualizes the Newton-Miller-Smith (NMS) extension of price sensitivity.

Instead of 'Too Cheap/Expensive', it asks 'How likely are you to buy at $X?' on a scale.

The chart shows the 'Mean Buy Probability' curve.

Use the Revenue curve (shaded area) to find the profit maximizing point.

Pro Strategy

NMS is often more accurate than Van Westendorp for consumer goods where 'Too Cheap' isn't a major concern.
Look for the steepest drop in the Buy Probability curve—that's your elasticity cliff.

Core Concepts

Newton-Miller-Smith

A methodology that asks purchase intent questions at two price points (one high, one low) to build a continuous probability curve.

Mean Buy Probability

The average likelihood that a random customer in your segment will purchase at a specific price.

Deep Dive

What is Price Sensitivity Meter (NMS)?

The Newton-Miller-Smith (NMS) extension addresses a flaw in Van Westendorp: VW doesn't tell you *how many* people will buy, only what they think is 'acceptable'. NMS adds purchase probability questions to estimate actual volume.

Best For

• Forecasting sales volume.
• Budgeting revenue for a new product.

Limitations

• Survey is longer than VW.
• Relies on stated preference (hypothetical bias).

Alternative Methods

Gabor-Granger

Simpler negotiation-style survey.

Industry Applications

See how this methodology generates real revenue uplift in different sectors.

CPG

Craft Beer Launch

Challenge

Needed to forecast Day 1 sales volume to inform brewery production.

Solution

Used NMS to estimate purchase probability at $12.99 vs $14.99 per 4-pack.

Identified that demand was highly elastic at $14.99. Launched at $13.99 to maximize total revenue dollars.

Education

Online Course Certification

Challenge

Setting price for a new professional cert.

Solution

NMS showed a 'double peak' in revenue—one at $199 (mass market) and one at $999 (executive).

Launched two separate SKUs (Self-Paced vs Cohort-Based) to capture both revenue peaks identified by the model.