Price sensitivity, also known as price elasticity of demand, is a measure of how the quantity demanded of a product changes with its price. It is directly related to the real value of a product as it provides insight into the consumers' perception of the product's value. If a product has high price sensitivity, it means consumers consider it overpriced and are less likely to buy it if the price increases. On the other hand, a product with low price sensitivity is seen as reasonably priced or valuable, and a price increase is less likely to affect its demand. Therefore, understanding price sensitivity can help businesses set optimal prices and predict sales volume.
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