WTP (Willingness to Pay)

Willingness to Pay (WTP) is the maximum amount of money a person is ready to spend on a good or service. It reflects the value or benefit they perceive from it. For instance, if someone is willing to pay $20 for a book, it indicates that they believe the book is worth that amount to them. Understanding WTP helps businesses set prices, assess market demand, and gauge customer satisfaction, as it reveals how much individuals value what they are buying. It’s a key concept in economics and marketing.