Willingness to pay

What willingness to pay means

Willingness to pay, often shortened to WTP, is the highest price a customer would accept for a product before deciding it's not worth it. Every customer has a different number, and it depends on what the problem costs them, what they use today and how much they trust you.

For a new idea it's the question that matters most after “is the problem real?”. Plenty of problems are real but not worth paying for. People will complain about something for years and never spend a cent fixing it.

Why asking doesn't work

Ask “How much would you pay for this?” and you'll get a polite guess. People don't know, and nothing is at stake when they answer. Economists call this the gap between stated and revealed preference: what people say they'll do, versus what they actually do when money is involved.

Stated answers tend to be too high when people want to be nice, and too low when they suspect you're about to sell to them. Either way, the number tells you little. What people already pay, and what they do when they see a real price, tells you much more.

Five ways to test it

From the weakest evidence to the strongest:

1. Look at what they pay today

The best starting point is free. What do people spend on the problem now, in tools, services, workarounds or hours? Someone paying an agency every month already has a budget and a price in mind.

2. Run a Van Westendorp survey

Four questions give you a price range instead of one guess (see below). Useful for choosing a starting price, not as proof that people will pay.

3. Put a price on the table in interviews

Don't ask what they'd pay. Describe the offer at a specific price and ask for a commitment: a trial, a letter of intent, a deposit. Notice who hesitates, and why.

4. Fake door on a pricing page

Put plans with real prices on a landing page and count clicks on each. Tell people straight away that it's not ready and offer to let them know when it is. You see which price people reach for.

5. Take pre-orders or deposits

Ask people to pay before the product exists, with a clear delivery date and a full refund if you don't deliver. The strongest evidence there is, because people paid.

The Van Westendorp price questions

The Dutch economist Peter van Westendorp introduced this method, the Price Sensitivity Meter, in 1976. You ask each person four questions about the same product:

1. At what price would it be so expensive that you wouldn't consider buying it?
2. At what price would it be so cheap that you'd doubt its quality?
3. At what price would it start to feel expensive, but still be worth considering?
4. At what price would it feel like a bargain, a great buy for the money?

Reading the results

For each question, plot what share of people named each price. Where the curves cross shows a range of acceptable prices: below it, people start to doubt the quality; above it, too many think it's too expensive. Start somewhere inside that range.

Treat the result as a starting point. It's still what people say, not what they do, and it works best with at least a few dozen answers from people who have the problem. Use it to choose the prices for your landing page test, then let clicks and payments decide.

Evidence that people already pay

The strongest sign before any test is money already being spent on the problem. In our ideas library, some of the clearest demand comes from people who already pay for a fix and aren't happy with it, like these small business owners paying for marketing help they can't judge:

Common pricing mistakes

Pricing for yourself

Founders often pick a price they'd pay. What counts is your customers' budget and what the problem costs them.

Testing with no price at all

A free sign-up shows curiosity, not willingness to pay. Always show a price, even in a test.

Too cheap to learn anything

At $1 almost anyone clicks, and you learn nothing about real value. Test the price you'd need to run a business.

One price only

Show two or three plans. Which one people choose tells you more than whether they click at all.

How to run a fake door test