Willingness to pay

What it is

Direct measurement of what a defined segment will pay for a defined offer, taken from buyers rather than from competitors' price lists. Techniques run from the four Van Westendorp price sensitivity questions through choice-based methods to controlled tests on live traffic — all of them answering what the customer would do, which no benchmark can.

The defined offer

Exactly what is being priced, including what is excluded. Vague offers get priced as whatever the respondent already knows, which is not the thing you sell.

The segment

Willingness to pay varies more between segments than between competitors. One blended number is usually the average of two real answers and matches neither of them.

The reference alternative

What the customer would do instead, including nothing at all. Price is judged against that alternative rather than against your costs.

The four price questions

Too cheap, cheap, expensive, too expensive. Where those curves cross bounds a range — and the "too cheap" answer, the one people leave out, is what catches quality signalling.

Stated against revealed

What people say they would pay sits reliably above what they do pay. Use stated methods to find the range and a live test to find the number.

Feature separability

Which parts customers will pay for on their own. This decides packaging, and it is frequently worth more than the headline price.

How you run it

1. Define the offer tightly, including exclusionsRespondents price what they picture. An underspecified offer is priced as the nearest thing they have already bought.
2. Segment before you askRun the work separately per segment. A blended willingness to pay is the average of genuinely different answers and will match nobody.
3. Anchor against the real alternativeIncluding doing nothing, which is the most common competitor. Price is always judged relative to the option the customer would otherwise take.
4. Use the four-question frame, not one open questionToo cheap, cheap, expensive, too expensive. The crossings give a defensible range, and the "too cheap" curve finds where a low price reads as a poor product.
5. Confirm the number with a live testStated intent sets the range; a controlled test on real traffic or a real quote sets the price. Never ship a price that only survey respondents have agreed to.

The prompt

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