Willingness to pay examples
We've done a lot of research on the effects of WTP on different companies in our Pricing Page Teardowns. Here are three examples showing how each company could use WTP to improve their pricing strategy.
Spotify's standard plan is $9.99 a month, which is right in line with overall WTP in the 7,458 survey respondents we talked to:
Overall WTP for Spotify.
But what is interesting is how big of a range there is. Based on our data, Spotify customers are willing to pay between $5 and $15 for their monthly subscriptions. This indicates that there's an opportunity to differentiate with some additional pricing tiers, which Spotify has done with their Family plan.
The problem is the plan is only $14.99 a month. Based on our research, that's under the WTP for people who are looking for a plan for up to five users:
Willingness to pay for different features of Spotify.
Using this WTP data, it looks like Spotify could definitely raise that price by at least $3 without an issue, and even up the price to $25 for some consumers.
By researching WTP, we were able to show that Spotify had an opportunity to increase their prices significantly for their Family plan.
For Amazon, we found a lot of interesting data based on different customer segments. By surveying 11,089 Prime customers, we found that age and annual salary were two of the biggest factors impacting WTP for their product.
Willingness to pay for different age brackets of Amazon Prime customers.
In 2014, Amazon Prime was only $7.99 a month, which they raised to $9.99 first, then finally $12.99. That took them from $95.88 per year to $119.88, then $155.88. That first jump put Amazon in a great position to capitalize on every age bracket in our graph.
The second jump actually put them above the average WTP based on age but was a great choice for the upper salary brackets shown below:
The effects of annual income on annual willingness to pay.
Amazon is pretty much spot on with the $100K to $150K annual salary bracket, which indicates to us that they're going more upmarket with their positioning to capitalize on the increased WTP.
Ecommerce store provider Shopify is one of the companies we found that did the best job of pricing for their customer's WTP. They offer a $29 basic, $79 premium, and $299 enterprise tier for customers. When we break down WTP based on gross merchant volume (the number of sales they made in one year), they're right in line with the data.
Willingness to pay for Shopify customers based on annual shop sales.
Their basic package appeals to people who are just getting started, and their standard plan moves up nicely into the $1.01M to $5M per year range. From there, you would think that $299 was a big leap, but it's actually under the WTP for larger companies doing $15.01M+ per year.
Shopify's pricing tiers grow at approximately the same rate as their customers. The more successful a customer is, the more they're willing to pay and the more features they're likely to need. By structuring their pricing in this way, Shopify makes it easy to grow alongside their customers.