Price sensitivity, also known as price elasticity of demand, is a measure of how the quantity demanded of a product changes with its price. If a product is highly price sensitive, it means that a small change in price will result in a large change in the quantity demanded, indicating that the product is elastic. On the other hand, if a product is not very price sensitive, a change in price will not significantly affect the quantity demanded, indicating that the product is inelastic. Understanding price sensitivity can help businesses forecast sales volume more accurately and set optimal prices.
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