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Knowledge of price sensitivity can help in setting optimal prices by providing insights into the perceived value of a product or service by the customers. If a product has high price sensitivity, it means customers consider it overpriced and may not be willing to buy it at its current price. On the other hand, if a product has low price sensitivity, it means customers are willing to pay a higher price for it. This information can be used to adjust the prices accordingly to maximize sales and profits. Furthermore, understanding price sensitivity can also help in forecasting sales volume more accurately and influencing customer behavior through specials, discounts, and other marketing techniques.
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Price sensitivity (a.k.a. price elasticity of demand) evaluates the product's real value which, in turn, provides an insight into the shoppers' readiness to swipe their cards. Knowing the product's price sensitivity gives the power to forecast the sales volume more accurately. The high price-sensitivity signals that customers consider the product or service unreasonably overpriced. And the low price sensitivity signals that the higher price will most likely have no negative effect on shoppers' willingness to purchase the product. But most importantly, knowing the level of price sensitivity allows to set optimal prices across every category in the product line, as well as influence customer behavior through specials, discounts and other marketing techniques.
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Take the most advantageous pricing approach to increase profitability of your organization. Use our Pricing Strategies presentation to outline factors...
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