Willingness to Purchase is the main factor that represents customers demand for a product or service. It varies by customer and is impacted by different attributes such as brand, price elasticity, quality of product and promotion. By understanding customers willingness to purchase, companies can improve their pricing strategy to optimize revenue. 

The Customer Value line, also called “Ceiling“, represents the maximum price a customer is willing to pay for the product. Every price point above the Ceiling is not a good price as it will cause the demand to dcrease.

The Company Cost line, also called “Floor of Price“, is the minimum price the company needs to charge to cover the production costs of the product (e.g. variable costs, marginal costs).

Every price combination between the Floor and the Ceiling are possible prices for the product where also competing prices can be expected.