Willingness to Pay (WTP)

Willingness to Pay (WTP) is the maximum amount someone is prepared to spend to acquire a good or service. It reflects how much value or importance a person assigns to that product or benefit. For example, if you’re willing to pay up to $50 for a concert ticket, that amount represents your WTP. WTP helps businesses and policymakers understand customer preferences and how much demand might exist at different price levels, guiding pricing strategies and resource allocation to better match what consumers value.