Price sensitivity, also known as price elasticity of demand, significantly affects the perception of a product's value. When a product has high price sensitivity, it means that customers perceive the product as overpriced. On the other hand, low price sensitivity indicates that a higher price will not negatively impact customers' willingness to purchase the product. Understanding the level of price sensitivity allows businesses to set optimal prices and influence customer behavior through marketing techniques such as specials and discounts.
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