The traditional PSM approach is conducted as follows:

• A respondent is presented with a product/service concept and he is then asked 4 questions:
  • At what price would you consider the product to be so expensive that you would not consider buying it? (Too expensive – prohibitive price)
  • At what price would you consider the product to be priced so low that you would feel the quality couldn’t be very good? (Too cheap)
  • At what price would you consider the product starting to get expensive, so that it is not out of the question, but you would have to give some thought to buying it? (Expensive/High Side)
  • At what price would you consider the product to be a bargain—a great buy for the money? (Cheap/Good Value) Which is prohibitive price for you for this product/service?
• One distribution for each question gives a series of four cumulative distributions which are then evaluated.
• The cumulative distribution is plotted on a chart. The Х axis shows price, while the Y axis - the accumulated percentage of respondents.
• The intersection of “expensive” and “cheap” lines is described as IDP (the indifference price point). This is the price that most respondents consider neither cheap nor expensive, thus they are indifferent to this price. This price point is sometimes described as perceived normal price.
• The intersection of “too expensive” and “too cheap” lines represents OPP (the optimum price point). This is the price point where the smallest percentage of respondents is likely to reject the product due to its too expensive price. Optimal in this sense refers to the fact that there is an equal tradeoff in extreme sensitivities to the price at both ends of the price spectrum. This is the recommended price point under PSM. This point is also referred to as market penetration (or market entry) price.
• The intersection of “too cheap” and "expensive/not cheap" lines can be the lower bound of an acceptable price range. Some describe this as the "point of marginal cheapness" or PMC.
• The intersection of “too expensive” and “cheap/not expensive” gives the upper bound of an acceptance price range. It is described as PME (point of marginal expensiveness).