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Willingness-to-Pay with high none option

Hi,

please mind english is not my native language so if there are any misconceptions just ask.

So I am trying to figure out the WTP in my study. I noticed that I have a pretty high "none" rate (~40 %).
My most important attributes are  price per month (38%) and public transport (33%).
Afaik u should choose the market simulator to estimate the wtp. So I made 2 products with the same attribute levels except the PT attribute and the price attribute to measure the wtp for PT right? The result would mean that people are a lot more willing to pay for PT then I would have assumed (I assumed ~100€ compared the the result ~270€).

Next question is: I have tried to  "teach" 50% of people having a car, about the monthly costs of owning a car. The reason is, that i wanted to check if there would be any effect on the WTP. So I have a segment now which indicates me if a person was "teached".

First of all the result on measuring the WTP for PT in the segmentation part is over all higher but the share of preference is very low (~10% per product) and the none option has 80%.

Am I doing things wrong? Was my study design poor? Need help because I am pretty late with my thesis :(
asked Nov 23 by MaaS (125 points)

1 Answer

+1 vote
We've been thinking a lot about WTP lately and have been researching and developing better ways to estimate it.  

First, realize that as realistic as we try to make our studies, in a survey, respondents don't spend real money, they spend survey money - you don't have to work as hard to earn survey money, so it's easier to spend, and this inflates WTP.  

One thing folks have recommended in classes when we've taught simple methods to estimate WTP is that rather than comparing just two products (one with the feature and a higher price and one without the feature at a lower price) you might want to simulate a scenario that contains your test product (without the feature and at the lower price) along with the none alternative and several (4-8) competing products.  Get the share of your test product in this scenario and write it down.  Now add the feature to the test product and lower the price until it's the same as it was before when you wrote it down.  The difference in price you get now may well be a lower, more credible, estimate of WTP.
answered Nov 23 by Keith Chrzan Platinum Sawtooth Software, Inc. (78,825 points)
Thanks for the reply.
Just to clear my confusion, I should add the feature and lower the price?
Shouldn't I rather raise the price?
Yes, I'm sorry, add the feature and raise the price.
Another double check from my side:
When I set up the project information in the choice simulator I need to edit the attibute info. I check both boxes at the attribute price "is continous" "is price" and write in the values of the label?
Yes.  If you have more questions about using the simulator software, please contact support@sawtoothsoftware.com
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