Price sensitivity, also known as price elasticity of demand, can significantly impact an organization's profitability. If a product has high price sensitivity, it means customers consider it overpriced, and any increase in price could lead to a decrease in sales volume, affecting profitability. On the other hand, if a product has low price sensitivity, the organization can increase the price without significantly affecting the customers' willingness to purchase, potentially leading to higher profitability. Understanding price sensitivity allows an organization to set optimal prices and influence customer behavior through specials, discounts, and other marketing techniques.
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