Willingness to pay

For willingness to pay to avoid an undesirable feature, see Willingness to accept.

In behavioral economics, willingness to pay (WTP) is the maximum price at or below which a consumer will definitely buy one unit of a product. This corresponds to the standard economic view of a consumer reservation price. Some researchers, however, conceptualize WTP as a range.

According to the constructive preference view, consumer willingness to pay is a context-sensitive construct; that is, a consumer's WTP for a product depends on the concrete decision context. For example, consumers tend to be willing to pay more for a soft drink in a luxury hotel resort in comparison to a beach bar or a local retail store.

See also

• Cost-benefit analysis
• Welfare economics

Further reading

• Anderson, James C., Dipak Jain, and Pradeep K. Chintagunta (1993), "Understanding Customer Value in Business Markets: Methods of Customer Value Assessment," Journal of Business-to-Business Marketing, 1 (1), 3–30.
• Breidert Christoph, Hahsler, Michael, and Reutterer (2006), "A Review of Methods for Measuring Willingness-to-Pay", Innovative Marketing, 2(4), 8–32.[1]
• Miller, Klaus M., Hofstetter, Reto, Krohmer, Harley, Zhang, John Z. (2011), "How Should Consumers' Willingness to Pay be Measured? An Empirical Comparison of State-of-the-Art Approaches", Journal of Marketing Research[2].
• Wertenbroch, Klaus and Bernd Skiera (2002), "Measuring Consumers' Willingness to Pay at the Point of Purchase," Journal of Marketing Research, 39 (May), 228–41[3].