Willingness to Pay (WTP) is the maximum price a customer is willing to pay for a given product or service. It is the fundamental concept in value-based pricing — price should be below WTP but as close to it as possible.
How to measure WTP
- Surveys (Van Westendorp, Gabor-Granger methods)
- Price experiments (A/B testing)
- Economic value analysis
- In-depth customer interviews