Willingness to Pay: The Most a Customer Would Accept to Pay
Willingness to pay, or WTP, is the maximum price a customer would accept to pay for an offer in a given context. It varies from customer to customer and changes depending on the alternatives they have.
Liking an idea, wanting a benefit and agreeing to pay for it are different things. Plenty of people say they would buy, then don’t when the price actually shows up.
How to investigate it
- Conversations with people who have the problem. Ask what they already do to solve it and what that costs them today, in money and in time.
- Price range questions. The Van Westendorp method uses four questions: at what price is it so cheap you wouldn’t trust it, cheap, expensive, and too expensive to consider.
- Comparing packages. Show two or three combinations at different prices and see which one the person chooses. This reveals more than asking what each item is worth.
- Real sales. A presale, a waitlist with a deposit, or a proposal sent to a prospect. This is the most reliable test, because it involves money.
Willingness to pay for each benefit on its own doesn’t add up automatically. Some benefits complement each other and others overlap. That’s why it’s worth testing the whole package too. I wrote more about this in The price has to be part of the offer from the start.