willingness to pay

Willingness to pay is a central concept in economics.

Reflecting the perceived customer benefit, willingness to pay indicates the maximum price a customer is willing to pay for a good or service. To determine willingness to pay, experiments, surveys or conjoint analyses can be conducted. The latter method is particularly suitable for evaluating individual components of an overall service regarding willingness to pay. The resulting customer benefit can thus be optimized before and during product development. The concept of willingness to pay is based on an “outside-in perspective”. This means that the customer and his needs are placed at the center of business activities.