In order to determine optimal prices, it is useful to have valid measures of customers' willingness-to-pay for a product (good or service). Several methods to measure willingness-to-pay have been discussed and compared in the literature. The authors contribute to this discussion by comparing the direct and hypothetical Van Westendorp Price Sensitivity Meter to classical, direct willingness-to-pay measurement methods, namely contingent valuation and the Becker-DeGroot-Marschak mechanism. Results indicate that the Van Westendorp Price Sensitivity Meter yields biased results because of its hypothetical nature and its focus on minimum customer resistance. However, the authors find it to be a method of high predictive quality for eliciting willingness-to-pay since the measurement results are comparable to those of the incentive-aligned Becker-DeGroot-Marschak mechanism.
Pricing, Willingness-to-pay, Van Westendorp Price Sensitivity Meter, Becker-DeGroot-Marschak mechanism, Pricing Experiments.