Willingness-to-Pay: Are You Leaving Money on the Table?

A customer is willing to pay $500/month for your product.

But you’re only charging $100/month.

You’re leaving $400/month on the table.

Multiply that by 100 customers and you’re leaving $40,000/month in revenue.

This is the willingness-to-pay (WTP) problem: Charging less than customers would pay.

Why Willingness-to-Pay Varies

Different customers have different WTP based on:

1. How much value they get

Customer A uses your product to generate $100k/year in revenue. They’d pay up to $20k/year (20% of value).

Customer B uses your product to save 5 hours/week. They’d pay up to $2,500/year (value of 5 hours/week at $25/hour).

Same product, very different WTP.

2. How much they’re budgeted to spend

Enterprise company budgeted $50k for this tool category. They’d pay up to $50k (they have the budget).

SMB company budgeted $2k. They’d pay up to $2k (that’s their limit).

3. How critical the product is

If your product is essential (payment processing), WTP is high. If it’s nice-to-have (note-taking app), WTP is low.

4. What alternatives exist

If there’s a free alternative, WTP is low (forced to compete on price). If you’re unique, WTP is high (customer has no choice).

5. How much pain the customer is in

If they’re hemorrhaging money (problem is urgent), WTP is high. If it’s a nice optimization, WTP is low.

Measuring Willingness-to-Pay

Method 1: Van Westendorp Price Sensitivity Meter

Ask customers 4 questions:

At what price would this product be a bargain?
At what price would this product be expensive but worth considering?
At what price would this product be so expensive you wouldn’t consider buying?
At what price would this product be so cheap you’d question its quality?

Results show:

Price point where most people see it as fair value
Your price ceiling (too expensive)
Your price floor (too cheap to trust)

Method 2: Conjoint analysis

Show customers different product/price combinations and ask which they’d buy:

Product A (basic features, $50/month)
Product B (advanced features, $150/month)
Product C (premium features, $300/month)
Don’t buy

Track which combinations customers choose. WTP is revealed by their choices.

Method 3: Segmentation analysis

Different customer types have different WTP:

Enterprise: $1,000/month Mid-market: $300/month SMB: $50/month

Create pricing tiers that match these segments.

Method 4: Job-to-be-done interviews

Ask customers:

“What outcome do you need?”
“How much is that outcome worth to you?”
“What would you pay for it?”

Answers reveal WTP based on actual value.

Example:

“I need to track customer support tickets and reduce response time by 50%”
“That would save us 20 hours/week at $50/hour = $52k/year in cost savings”
“I’d pay up to $10k/year for that outcome”

This is more reliable than hypothetical questions.

Pricing Tiers as WTP Segmentation

Instead of one price, create multiple tiers that match customer WTP:

Starter ($50/month):

For: Solo founders, small teams
WTP: $20-100/month
Features: Core functionality only

Professional ($200/month):

For: Growing teams, companies up to 100 people
WTP: $100-400/month
Features: Everything + advanced options

Enterprise ($1,000+/month):

For: Large companies, custom needs
WTP: $500+/month
Features: Everything + custom features + support

Customers self-select into the tier matching their WTP.

A customer willing to pay $400/month chooses Professional ($200) or Enterprise ($1,000), not Starter ($50).

Price Discrimination (Legal and Ethical)

You’re essentially charging different customers different prices based on their WTP.

This is legal and ethical as long as:

Different tiers have genuinely different features/value
Customers can see all tiers and choose
You’re not charging one group more for the same thing

Example (good): Starter vs. Professional tier with different features

Example (bad): Charging one customer $100 and another $200 for identical product

The Anchor Price Effect

Your current price anchors customer expectations.

If you’re charging $100/month, customers think the value is worth ~$100.

If you raise to $200/month without explanation, customers think you’re being greedy.

If you introduce a $50/month tier and a $300/month tier, suddenly $200 seems reasonable (anchored between the two).

Use anchoring strategically:

If your single price is too low, introduce a lower tier and higher tier
The low tier makes the current price seem like good value
The high tier makes customers feel like they’re getting a deal

Capturing Value Through Packaging

You can increase WTP without raising price by changing what’s included:

Option 1: Unbundle features

Charge for things that were “free” before:

“Advanced reporting” is now an add-on (+$50/month)
“API access” is now an add-on (+$100/month)

Customers willing to pay for these add-ons do. Others stick with base tier.

Option 2: Bundle features

Combine features into packages that deliver more value:

“Starter” includes core + basic reporting
“Professional” includes everything + advanced integrations
Bundling increases perceived value, justifies higher price

Option 3: Usage-based pricing

Charge based on consumption rather than fixed price:

Pay per API call
Pay per team member
Pay per GB stored

Customers with higher usage pay more (matching their WTP).

The Value Ladder

Create a clear progression of pricing that captures different WTP levels:

Tier	Price	WTP	Target	Capture
Free	$0	$0-20	Students, hobbyists	No revenue
Starter	$50	$20-100	Small teams, cost-conscious	40% of WTP
Professional	$200	$100-400	Growing companies	50% of WTP
Enterprise	$1,000	$500-2,000	Large companies	50-100% of WTP

By offering multiple tiers, you capture more revenue than a single price point.

When You’re Underpricing

Signs that you’re leaving money on the table:

1. Customers rarely upgrade tiers

If everyone buys Starter and nobody upgrades, you’re probably underpriced overall.

(Or your tiers are poorly designed.)

2. Customers want more features but won’t pay extra

“Can you add [feature]?” usually means they’d pay for it if asked.

3. Enterprise customers negotiate down

If Enterprise customers demand 50% discounts, your base price might be low.

4. Sales team says customers never object to price

If price is never a negotiation, you’re probably too cheap.

5. You can’t afford great support

If your margins are thin and you can’t hire support staff, you’re underpriced.

When You’re Overpricing

Signs that you’re charging too much:

1. High churn / low conversion

Customers don’t buy because price is too high.

2. Customers request discounts constantly

If 50% of customers ask for discounts, price is misaligned with value perception.

3. Competitors have much lower prices

If competitors are half your price, either:

You’re overpriced, or
You’re genuinely better (worth the premium)

4. Sales cycle takes too long

If customers take months to decide, price might be a barrier.

The Takeaway

Most companies underprice because:

Founder fears customers won’t pay
Hasn’t measured actual WTP
Prices are set by accident (just picked a number)

Measure WTP through surveys, analysis of your customer segments, or value-based pricing conversations.

Create multiple tiers that match different customer segments’ WTP.

Don’t leave money on the table. Increase prices, increase margins, and reinvest in product.

We help you measure willingness-to-pay, design pricing tiers, and capture more value from your customer base.