1/15/2023 0 Comments Elasty mac![]() ![]() When speaking with major brands, we’ve heard that it’s important to measure price elasticity because retailers won’t always say when they’re going to discount an item or alter their pricing approaches. Specifically, price elasticity goes together with pricing intelligence and price monitoring. Price elasticity relates to many other important metrics and measurements in the retail space. Sometimes, brands catch on to elastic products when they notice their margins shrinking. ![]() Therefore, PED is an important metric to measure because it helps predict the behavior of shoppers and identify whether a price change will have a positive or negative effect on your sales. Few brands are on Apple’s level, of course, and will instead see shoppers buy from a competitor after a price change. For example, Apple has inelastic products because changes in price have little effect on demand: shoppers will still line up outside the store for a new Apple product. In the real world, price elasticity of demand can be closely tied to brand reputation. With price elasticity, the measurement is how significant the impact on demand is when a small price change is implemented. It’s like supply and demand, where limited supply results in higher prices. ![]() Price Elasticity of Demand (PED) is determined via a mathematical formula: % Change in Quantity / % Change in Price. First, let’s talk a bit more about what price elasticity is and why it matters in retail. Simply put, inelastic products see little change in demand from a change in price, while the opposite is true for elastic products.īut that’s getting ahead of ourselves. But it’s been a few months, so now’s as good a time as ever to dive back into the world of price elasticity.Įxcited? You should be! Price elasticity-or the price elasticity of demand-is a formula used to determine how a price change will impact the demand for a specific product. The last time we talked about price elasticity, it was in the context of the dreaded price war. ![]()
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