# Calculating WTP from utilities

Hi,

I was wondering if I understand the calculation of WTP correctly.
Hypothetical example;
I have 4 price levels: \$3.00, \$6.25, \$9.50, and \$12.75.
The utitilies of those levels are 0, -20.4, -32.4, and -42.9, respectively.

I then calculate the dollar value of a utility point by dividing the range of the price attribute by the range of the utilities, so 9.75 / 42.9 = \$0.23.

I then have an attribute 'battery life' with several levels. The levels 4 hours and 8 hours have utilities of 7 and 17, respectively. I multiply the difference in utility between those two levels with the dollar value of a utility point (10 x \$0.23 = \$2.30) in order to conclude that respondents are willing to pay an additional \$2.30 for the battery lasting 8 hours compared to the battery lasting 4 hours.

Is this correct?

(I know from previous questions on this forum that this is not an optimal way of calculating WTP, however I still want to know whether the example mentioned above is correct).

Thank you in advance for the help!
answered Jun 16, 2019 by Platinum (84,975 points)