Willingness-to-pay (WTP) is the maximum price the customer would have paid for the product, which the economist claims is how much the customer values the product. “Value” could come from anything—utility, pleasure, status, even irrational confusion. The economist claims that any transaction is evidence that WTP > Price, and the difference between those numbers is “Consumer Surplus.”

It looks trivial at a first glance, but I’ve come to believe that analyzing “WTP” is not only non-trivial, but also leads to very different strategies, business models, and outcomes.