A Review of Methods for Measuring Willingness-to-Pay

Knowledge about a product’s willingness-to-pay on behalf of its (potential) customers plays a crucial role in many areas of marketing management like pricing decisions or new product development. Numerous approaches to measure willingness-to-pay with differential conceptual foundations and methodological implications have been presented in the relevant literature so far. This article provides the reader with a systematic overview of the relevant literature on these competing approaches and associated schools of thought, recognizes their respective merits and discusses obstacles and issues regarding their adoption to measuring willingness-to-pay. Because of its practical relevance, special focus will be put on indirect surveying techniques and, in particular, conjoint-based applications will be discussed in more detail. The strengths and limitations of the individual approaches are discussed and evaluated from a managerial point of view.