How ChatGPT Used Van Westendorp Pricing to Set Its $20 Subscription Plan
- Renato Silvestre
- Sep 19
- 5 min read
Updated: Oct 12
When OpenAI launched ChatGPT, it quickly became the fastest-growing product in history. Millions of users flocked to the platform, overwhelming servers. The team faced a crucial question: How do we price this product?
One might think that a multi-billion-dollar company with some of the brightest minds would rely on complex simulations or cutting-edge algorithms to determine the price.
A Simple Survey with Big Insights
Instead, ChatGPT's team, led by Nick Turley, Head of ChatGPT, opted for a straightforward approach. They created a Google Form survey and shared it in a Discord channel, a popular community chat platform among developers and tech enthusiasts. This agile survey resulted in the now-famous $20/month “Plus” plan. This pricing model not only generated billions in revenue but also set a new benchmark for SaaS subscriptions across the industry.
The survey was not just a shot in the dark. It utilized the Van Westendorp Price Sensitivity Meter (PSM), a pricing methodology that has been around for over 50 years.
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Understanding the Van Westendorp Price Sensitivity Meter
In the 1970s, Dutch economist Peter van Westendorp developed a simple method to gauge customer perceptions of value. Instead of directly asking how much someone would pay, he created a set of four questions to uncover psychological thresholds:
At what price would this product be *too expensive for you to consider
At what price would this product be *so cheap that you would doubt its quality
At what price would this product *seem expensive, but you would still consider buying it
At what price would this product be *a bargain, a great buy for the money
The responses to these questions outline an acceptable price range. This range includes a lower bound where quality remains credible, an upper bound where willingness to pay declines, and a middle zone where customers feel the price is fair. The intersections of these curves reveal the optimal price that balances credibility, affordability, and perceived value. This framework is widely used for its ability to convert subjective opinions into practical guidance, especially when pricing new products without existing benchmarks.
Why Van Westendorp Worked for ChatGPT
When ChatGPT launched, there was no established playbook for pricing. It was not a typical productivity app, enterprise software, or mobile subscription. It was something entirely new. Traditional pricing strategies, such as benchmarking against competitors or analyzing historical sales data, were nearly useless.
With the Van Westendorp framework, OpenAI could act swiftly. By distributing the survey in a Discord community of early tech-savvy adopters, they reached an audience likely to understand the product’s potential and articulate its value. This approach allowed them to gather meaningful pricing insights quickly, transforming what could have been a lengthy research process into a lean, agile exercise that matched the pace of a hyper-growth offering.
STRATEGENCE + The Van Westendorp Method
One of the strengths of the Van Westendorp methodology is its ability to visualize customer perceptions clearly. The chart below is an example from a STRATEGENCE study in the computer hardware industry, illustrating the four lines generated by survey responses and their interpretations.
Key Points of the Van Westendorp Method
Point of Marginal Cheapness: This is where the "Too Cheap" and "Not Cheap" lines intersect ($2,400 in this example). It represents the pricing floor. Below this point, more customers would question the product's quality than would be attracted by the low price, marking the lower end of an acceptable price range.
Viable Price Range: The range between the Point of Marginal Cheapness ($2,400) and the Point of Marginal Expensiveness ($8,400) represents the market's acceptable pricing range. Within this range, customers perceive the product as fairly priced, balancing quality expectations with value perceptions.
Point of Marginal Expensiveness: The price where the "Bargain/Great Buy" and "Too Expensive" lines cross ($8,400) marks the ceiling. Beyond this threshold, the cost becomes a significant concern for most customers, and perceived value no longer justifies the price.
Recommendation: Based on survey results, the optimal price is $4,600. This is where the fewest respondents perceive the product as either “too cheap” or “too expensive.” The lower bound of the range ($2,400) represents a credible value offering, while the upper bound ($8,400) supports a premium positioning.
In the case of the ChatGPT survey, the ideal price would have led them to $20. However, the team would have also identified a range of viable prices, depending on whether they wanted to pursue bargain pricing or premium pricing.
STRATEGENCE + Pro Tips
Pro Tip 1: Treat it as a Starting Point
We recommend that product teams treat Van Westendorp as a starting point, not the finish line. The real-world test comes after launch, when behavioral data, such as renewals, upgrades, and churn, starts rolling in. That’s when companies can layer on A/B testing, elasticity analysis, or conjoint studies to refine and optimize pricing over time.
Pro Tip 2: Revise the Flow
At STRATEGENCE, we adjust the order of Van Westendorp questions to improve data quality. Instead of starting with “too expensive,” we begin with “too cheap” and move upward:
Too cheap → Bargain → Getting expensive → Too expensive
This sequence reduces anchoring bias, follows a more natural low-to-high cognitive flow, and produces smoother, more consistent response patterns. The methodology works in any order, but this variation often yields cleaner insights and stronger pricing guidance for our clients.
Pro Tip 3: Add Two Additional Questions with Follow-Up Diagnostics
We enhance the traditional Van Westendorp approach by adding two additional questions that connect price threshold perceptions with likely purchase intent, providing a fuller view of customer behavior.
If the product were priced at [Insert BARGAIN price], how likely would you be to buy it? (followed by an open-ended “Why?”)
If the product were priced at [Insert GETTING EXPENSIVE price], how likely would you be to buy it? (again, followed by “Why?”)
Pro Tip 4: Provide Detailed Context When Presenting Stimuli
When presenting a product concept in a survey, provide as much context as possible. Price is one of the 4Ps of marketing and is strongly influenced by the other three (product, placement, and promotion). Respondents need a clear understanding of features, benefits, and positioning to provide meaningful pricing feedback.
Conclusion: The Human Side of Pricing AI
The story of ChatGPT’s $20/month plan serves as a reminder that even the most advanced technologies need tried-and-true human frameworks to succeed. OpenAI didn’t rely on an algorithm to price the world’s most powerful AI assistant. Instead, it leaned on a decades-old market research methodology that continues to prove its relevance today.
The Van Westendorp Price Sensitivity Meter, especially when enhanced with diagnostic questions and careful survey design, provides clarity in uncharted markets where no benchmarks exist. It bridges perception with intent and data with action.
At STRATEGENCE, we view this as the art and science of pricing: blending proven methodologies with rigor, agile execution, and translating consumer perceptions into strategies that generate both adoption and revenue. Whether launching an AI product or a new consumer device, the same principle applies: the right partner and market research give you the confidence to set prices that stick.
Ready to find your product’s $20 moment? Book a free strategy session here or email me at rsilvestre@strategence-us.com.
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