Doing Willingness to Pay Estimation (WTP) Right

When price is included as an attribute in conjoint analysis (e.g., CBC or ACBC), researchers and managers naturally want to try to quantify how much people are willing to pay in terms of money for attribute levels. The traditional WTP approach is flawed and ignores competition. Two more recent methods lead to more realistic WTP values and directly consider competition. We’ll show the WTP feature in Sawtooth Software’s desktop simulator, then also show you an algebraic approach (from Greg Allenby, OSU) that’s easy to calculate in Excel or similar!