Understanding price sensitivity for a business has several benefits. It allows the business to evaluate the real value of their product, which can provide insight into the readiness of customers to make a purchase. It also gives the business the ability to forecast sales volume more accurately. If a product has high price sensitivity, it may signal that customers consider it overpriced. On the other hand, low price sensitivity may indicate that a higher price will not negatively affect customers' willingness to purchase. Most importantly, understanding price sensitivity can help a business set optimal prices across their product line and influence customer behavior through specials, discounts, and other marketing techniques.
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