Have an idea?

Visit Sawtooth Software Feedback to share your ideas on how we can improve our products.

Using ACBC: How to best illustrate/interpret 'willingness-to-pay' (WTP) from ACBC data

Dear all,

I am using ACBC for my graduation project with the goal to find the most attractive attributes and/or levels for a certain product and the customers' WTP for these levels.

The attribute price will be the set as 'summed prices attribute'  with either linear or log-linear distribution. The different levels I plan to use will also have a particular price per level.

My question now is: how do I express a WTP for a particular level?

Given the example, that attribute A has 3 levels. Level 1 incurs extra cost of 1€, Level 2 of 2€ and Level 3 of 3€. Further the part-worths would be as follows:

Level 1: -0.5
Level 2: 0
Level 3: 0.5

I can clearly state that Level 3 is prefered to L2 and L1 despite its higher cost. Thus the given part-worths from HB estimation can already be regarded as a trade-off to the inherent price of each level?

But how would I get the actual WTP from these results for a particular level?

Many thanks
asked Jun 4, 2017 by Luke (280 points)

1 Answer

0 votes
Best answer
This is a challenging thing to do.  WTP is often estimated from conjoint analysis data, but it is very tricky to make this work right.  We wrote an article on the subject matter because of how often this question has come up over the years:  http://www.sawtoothsoftware.com/download/techpap/monetary.pdf
answered Jun 6, 2017 by Bryan Orme Platinum Sawtooth Software, Inc. (152,255 points)
selected Jun 8, 2017 by Luke