Willingness to pay for professional services
| DOI | https://doi.org/10.1108/10610421111108049 |
| Pages | 75-83 |
| Date | 01 March 2011 |
| Published date | 01 March 2011 |
| Author | Nada Nasr Bechwati |
| Subject Matter | Marketing |
Pricing strategy & practice
Willingness to pay for professional services
Nada Nasr Bechwati
Bentley University, Waltham, Massachusetts, USA
Abstract
Purpose – The purpose of this research is to build a model to help understand consumers’ willingness to pay (WTP) for professional services. In this
paper, professional services are services where, in general, consumers have the choice of doing the work themselves or outsourcing them such as
apparel care, landscaping and tax forms preparation.
Design/methodology/approach – The paper proposes a regression model to predict WTP. The model includes a set of independent behavioral
variables such as subjective knowledge, job anxiety,enjoyment and appreciation of leisure activities. Data from two cross-sectional surveys completed
by 488 and 479 consumers are used to test the proposed model.
Findings – The findings support the importance of behavioral variables as determinants of consumers’ WTP for professional services.
Practical implications – Understanding which behavioral variables predict consumers’ WTP for professional services provides insightful implications.
The findings imply that, to increase WTP for professional services, service providers may consider stressing in their promotional messages how much
better the outcome is when they (versus consumers) produce the service, and making the importance of leisure activities and the related valueof time
more salient to consumers.
Originality/value – Unlike previous models, designed to measure WTP and which focus on demographic and economic variables, this model
introduces a set of behavioral variables. The findings support the importance of these variables in predicting WTP.
Keywords Pricing, Professional services, Decision making
Paper type Research paper
1. Introduction
Landscaping/lawn and garden services, carpentry, plumbing,
vehicle maintenance, apparel cleaning and alteration, tax
return preparations, financial services including investment/
retirement planning are all examples of services that, in
general, consumers have the choice of doing the work
themselves or outsourcing them. For simplicity purposes, I
refer to these services as professional services in this paper. I,
however, acknowledge that the level of an average consumer’s
basic knowledge may vary significantly across the services
listed above. For professional services, consumers may weigh
up a variety of factors before deciding whether to spend the
time and effort doing things themselves or pay money to get
them done by a professional. From a firm perspective, i.e. that
of a professional service provider such as an accounting firm
or a dry cleaner, managers need to set the right price. For this
purpose, managers need to address the following two key
questions:
1 What are the factors that consumers tend to consider
when deciding whether or not to outsource a professional
service?
2 How much consumers are willing to pay for a service?
Professional services that can be produced by consumers
present an interesting pricing challenge to service providers.
Traditional pricing techniques have called for considering
consumers, along with costs and competitors, in setting a
price. However, consumers’ perception of the value of a
service may have a special importance in pricing in the case of
professional services. The fact that consumers have the option
of producing the service themselves makes it essential for
service providers to understand what drives consumers’
decision to do the work themselves or outsource it. A main
determinant of such decision is how much consumers are
willing to pay for such services. Hence, consumers’
willingness to pay (WTP) is a key factor to consider and
understand by professional service providers while making
pricing decisions.
The purpose of this research is to build a model to help
understand consumers’ WTP for professional services.
Similar to Wertenbroch and Skiera (2002), I define WTP as
the maximum price that consumers are willing to pay for a
service. To construct our model, I identify the factors that
might affect this willingness and, for each factor, the valence
of the effect. The main contribution of my research is the
examination of a wide variety of factors, both economical (e.g.
household size and income) and behavioral (e.g. effort and
enjoyment) with emphasis on the role of behavioral variables.
2. Previous research
Research in home economics has focused on studying “do-it-
yourself” situations and valuing household production.
Researchers have studied factors impacting housewives’
decisions to join the labor force (Strober, 1977) and
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management
20/1 (2011) 75–83
qEmerald Group Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/10610421111108049]
75
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