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WTP for a particular service attribute combination

Dear Everyone,

I have a question on WTP calculation for a standalone and added services model.
I have calculated the individual part worth utilities based on CBC HB estimation.
As per the webinar, WTP = Price Range * (Attribute coefficient/Price Coeffient).

My price attribute levels are: $30, $60, $90, $120
The part worth utilities for the price points besides other service attributes are also calculated including the "None".

a) If I have to calculate the WTP for just subscribing to the service without any other features added, how should I approach this?
  As per the formula, Price range = $90; Attribute coefficient of $30= X (lets say); Price coefficient = linear coefficient of this price range (calculated from CBC/HB). Is this the correct way?

b) Now, if for a service to be subscribed, now I add 2 different attribute levels - lets say A1, B1
How would the WTP be calculated with this combination? The formula seems to capture just one attribute's level.

Could you please help me with this?

asked Apr 12, 2018 by sacharya (490 points)

1 Answer

0 votes
Best answer
Add up the attribute coefficients of the levels you want and divide the total by the price coefficient. That is of course assuming utility is linear-in-parameters and there are no interaction effects or income effects.
answered Apr 12, 2018 by ysm1nz Bronze (740 points)
selected Apr 13, 2018 by sacharya
WTP for main and interaction effects
I forgot to reply about interaction effects - you can estimate these by including interaction terms in your model. If your design was capable of detecting interaction effects. If not,  it will just be an insignificant parameter.
If your calculated WTP for a particular bundle is higher than the highest price in the design then you have to wonder would a user really pay that much for it, or would they be constrained by their budget?