This study used primary data to determine the factors that affect consumer preferences for milk product and the demographic effects of household aflecting consumer demand for milk in Islamabad/Rawalpindi, Pakistan. For this purpose study has applied the Hedonic Price Method along with Binomial Logit Model. Milk is categorized into two ways, one isfresh milk and other UHT tetra packed milk. Product characteristics have its further division including taste, fat, awareness about adulteration and effect of advertisement. On the other hand household characteristics were based upon the income, age, education, household size, gender, and their general awareness about quality of milk. The empirical results of log partial odds ratio and hedonic models revealed several interesting findings. First, price and quality having a major role. taste is the most important factor in the selection of the type of milk by the consumer when he compares fresh milk with UHT. Second, measures of attributes have a considerable impact on ‘the quantity demanded as the theory suggests. Lastly, consumer has more willingness to pay (WTP) for fresh milk as compared to the UHT milk, which is in favor to the initial hypotheses (people prefer fresh milk over UHT). Supervisor:- Dr. Usman Mustafa