Testing Customer Willingness to Pay (WTP) - Methods and Pitfalls

Understanding customers' willingness to pay is essential for setting effective pricing.

Common Testing Methods

• Basic Pricing Surveys: Ask customers at what price they perceive value and quality.

• Van Westendorp Price Sensitivity Analysis: Identifies acceptable price ranges by analyzing customer responses to price-related questions.

  
  

Pros and Cons of Each Survey Type

• Basic Surveys: Simple, quick, and straightforward; however, they can be biased or oversimplify complex decisions.

• Van Westendorp Analysis: Provides detailed pricing ranges but requires careful design and a clear understanding of customer value perception.

  
  

Pitfalls to Avoid

• Poor question design, leading to unreliable data.

• Failing to capture enough responses for statistical validity.

• Ignoring customer segments that significantly differ in price sensitivity.

  
  

Practical Tip: Combine qualitative interviews with quantitative surveys to validate and deepen insights about customer willingness to pay.