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| Lists Financial Transactions |
Willingness to pay is basically a price elasticity test. The law of demand
states that demand is inversely related to price– as prices go up,
demand will go down. Client loss with increasing prices is inevitable.
The challenge for social programmes is to set prices low enough to be
affordable to the target clientele and yet high enough to avoid cannibalizing
self - supporting, fully commercial brands and services. Willingness to
pay (WTP) surveys allows us to simulate price related changes in demand
without actually changing prices, showing the way to make pricing decisions
based on empirical information.
Expected revenues are calculated by multiplying expected number of sales
by price per unit sale. Depending on the shape of the demand curve, within
certain price ranges, declining sales will be more than compensated for
by increased price, and price increases will lead to increased revenues.
At other price ranges, a small increase will lead to relatively large
declines in sales, and a price increase will lead to decreased revenues.
Hence looking at the curve the revenue at different prices can be worked
out.
WTP surveys measure potential demand for products or services by asking
consumers,” would you purchase this product if it were offered at
this price?”
1. WTP Analysis Graphs final
2. WTP Revenue Graphs
3. WTP Analysis Graphs for ligation
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