Estimating Willingness-to-pay with Choice-based Conjoint Analysis - Can Consumer Characteristics Explain Variations in Accuracy?

Knowing consumers' willingness to pay (WTP) is crucial for making effective pricing decisions. We assess the accuracy of choice-based conjoint analysis (CBCA), a method strongly supported by behavioural theory, in the context of WTP measurement at the individual level. Furthermore, we analyse whether variations in the accuracy of WTP estimates derived by CBCA can be explained by consumers' involvement, brand awareness and the strength of consumer preferences. The results show that CBCA does not provide accurate WTP estimates and, on average, grossly overestimates the true WTP of consumers. No empirical evidence can be found that consideration of the above-mentioned consumer characteristics results in more accurate WTP values.