How Much Are Customers Willing to Pay?
Marketing Research
Winter 2002

Abstract:
Willingness to pay (WTP) is important to tactical pricing, but it's woefully inadequate as a basis for pricing strategy. Good pricing strategy isn't about estimating market demand and reacting optimally to it, it's about managing demand. Pricing strategists manage demand by making subtle changes to capture different levels of price from different types of buyers, by creating incentives for some customers to change when or how they buy, and by communicating information and framing price offers that cause customers to view the offer more favorably. To support those efforts, pricing strategists need more fundamental customer information than simple WTP. They must understand the level and antecedents of value, especially in B2B markets where benefits can be quantified and value can be readily measured.

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