Willingness to Pay (WTP) refers to the maximum amount of money a consumer is willing to spend on a product or service. It reflects the perceived value of that item to the buyer and can vary based on individual preferences, income levels, and market conditions. Understanding WTP helps businesses set prices that maximize revenue while ensuring customer satisfaction. Factors influencing WTP include the quality of the product, brand reputation, and availability of substitutes. For example, a consumer may have a higher WTP for a luxury brand compared to a generic alternative. Market research often assesses WTP to inform pricing strategies and product development.