Customer price sensitivity plays a crucial role in determining the pricing strategy. It refers to how the demand for a product changes when the price changes. If customers are highly sensitive to price, a small increase in price could lead to a significant drop in demand. Conversely, if customers are not very sensitive to price, the company can afford to raise prices without significantly affecting demand. Understanding customer price sensitivity can help a company set a price that maximizes profits while maintaining customer satisfaction.
Need to evaluate the best pricing strategy for a product? This Pricing Strategy spreadsheet includes...
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