Scary Moment of Truth: What’re Customers Really Willing to Pay?

Solid execution of value pricing requires an understanding of customer willingness-to-pay (WTP). To effectively implement the best prices, let’s spend a little time digging into the willingness-to-pay.

Our target with pricing – find the best prices for you and your customers, then implement them effectively.

​Define customer willingness-to-pay 

​Customer WTP is the maximum amount of money a customer is willing t​o ​hand over for ​what you sell. ​​By understanding WTP ​you​ ​possess knowledge. This knowledge ​helps you achieve ​a price as close as possible to what they’re willing to pay. You’ll know which strategies and tactics ​to use to ​get them to pay that much.

There are two main reasons WTP can be a challenge to understand.  

​​WTP Isn’t A Single point

A customer’s willingness-to-pay is affected ​by many things: ​ ​value perception, personal priorities, current pain points, alternative offers, etc. ​​These things change in a instant. Which means you can ask a customer the ​WTP question on two different days and get different answers. 

It also means ​WTP is hard to pinpoint, because it’s not a point! ​How can it be when it’s influenced by things that ​shift and change? Stop looking for the WTP point. ​Start looking at it as a range or zone.

​​​Bias Gets in the Way

The ​second challenge in understanding WTP ​is bias. When we ask customers WTP-related questions, ​their answers are infused with bias (even with the best of intentions). ​​When we try to limit customer bias by making our own “assumptions”, ​our own bias comes into play. ​We’re horrible at leaving our own biases behind. ​Instead we can strive to make more educated analysis to support ​our assumptions.

​3 Ways to Understand Willingness-to-Pay

​In this video we’ll ​look at why ​​direct WTP questions can backfire and what to do about it. Then ​I give you three ways ​to start understanding. ​These things can help you mitigate the challenges of understanding WTP.

​​Got questions? ​I just started a FB group, Charge Your Worth with Janene the Pricing Lady, where you can start asking some of those burning questions. Engage in discussions with myself and others about pricing.  See you there!

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