Why Willingness-to-Pay is a Local Thing

Value-based pricing requires data and insights. Without understanding what customers value, or are willing to pay, it very easily ends up being just a more sophisticated version of guesswork. Leading companies applying value-based pricing fully understand this. But there is still a trap when it comes to the willingness-to-pay data collected: because market research used to be expensive there could be a tendency to either skip some markets or generalising results from one key market to all other markets.

But willingness-to-pay is not a global sentiment, across all customers in all countries. Quite the contrary. What a Brazilian customer is willing to pay is likely quite different from what a German or Japanese customer is willing to pay. Even the features that they value or don't value will differ in most industries and for most types of companies. 

• The willingness-to-pay varies from country to country
• WtP often also varies inside a country, from customer segment to customer segment
• If a segment, or the entire customer base in a country values product feature A but doesn't care too much about product feature B, it may very well be that customers in another market only really care about product Feature C.

In the illustration below it can be seen that two different groups of customers (in different countries or different segments in the same country) can have different willingness to pay, expressed in two different demand curves in blue and green respectively.

With local willingness-to-pay insights and price research, such differences become clear and explicit. 

PriceBeam can provide you with affordable willingness-to-pay research in 109 countries world-wide. Get in touch to learn more or sign up for a free account.