Price sensitivity, also known as price elasticity of demand, can significantly impact a company'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, negatively affecting profitability. On the other hand, if a product has low price sensitivity, the company can increase the price without significantly affecting the customers' willingness to purchase, potentially leading to higher profitability. Understanding price sensitivity allows a company to set optimal prices and influence customer behavior through marketing techniques, ultimately affecting profitability.
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