Willingness to Pay

Output indicator

Indicator Phrasing

% of potential customers willing to purchase [specify the product or service] for [specify the price]
% de clients potentiels désireux d'acheter [précisez le produit ou le service] pour [précisez le prix]
% potencionálních zákazníků ochotných si zakoupit [uveďte daný produkt nebo službu] za [uveďte cenu]

Indicator Phrasing

English: % of potential customers willing to purchase [specify the product or service] for [specify the price]

French: % de clients potentiels désireux d'acheter [précisez le produit ou le service] pour [précisez le prix]

Czech: % potencionálních zákazníků ochotných si zakoupit [uveďte daný produkt nebo službu] za [uveďte cenu]

What is its purpose?

This is an essential 'demand side' indicator assessing the proportion of potential customers who are willing to purchase the promoted product for a certain price (for example, purchase a specific type of a water filter for 4 USD).

How to Collect and Analyse the Required Data

Collect the following data by conducting individual interviews with a representative sample of your target group members:

 

RECOMMENDED SURVEY QUESTION (Q) AND POSSIBLE ANSWERS (A)

Q1: If a seller offers your household [specify the product / service] for [specify the price], would you buy it?

A1: yes / no / I do not know

     

Calculate the indicator's value by dividing the number of respondents willing to purchase the product/ service for the given price by the total number of respondents and multiply the result by 100. 

Important Comments

1) The fact that a person says that s/he would buy the product for the given price does not necessarily mean that s/he will actually do it. To some extent, the other way round might also apply – a person who initially refuses to pay the price might decide to do it once s/he is more convinced of the product/ service's benefits. Despite these 'inaccuracies', the data provided by the indicator are essential for any marketing-related activities that introduce new or promote existing products.

  

2) To avoid any misunderstanding, show the respondent the product (or its photo) you are asking about.

  

3) In case you are interested in people's willingness to pay (WTP) for a new or locally unfamiliar product/ service which might be difficult for the target population to imagine, introduce the product/ service first, describe its benefits and only then ask about the respondent's willingness to pay (it is a challenging task for the respondents to decide how much they would pay for a product/ service they are not familiar with).

  

4) The price you inquire about should be the real price of the given product (you are assessing how many people might be willing to pay for it).

  

5) The indicator assesses willingness to pay by using a simple customer survey method. There is a range of other methods you can use, such as experimental auctions. To learn more, read A Review of Methods for Measuring Willingness-to-Pay (see link below).

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