You may have heard of price sensitivity before , and if not, if you own a business you have probably suffered its consequences (even if you didn't know it).
Price sensitivity is a key concept when it comes to generating sales in our company and, therefore, income. If we make a mistake when setting our hourly price, we can see that we do not have enough customers because we are not competitive, which is why it is phone number in united kingdom so important to know the price sensitivity of our customers. This concept is closely related to the elasticity of demand , a concept from microeconomics.
In the end, the question is how much sales go up or down when the price changes, which depends a lot on the type of product or service we have. There are products that, because they are of high value to the customer, increase their sales when their price is lowered, which is why it is so common to use discount coupons to increase sales of major brands in the supermarket. In this case, price sensitivity is positive on the part of customers and with a discount, so as not to have to lower the price in the long term, we can see how our sales increase.
The opposite can also happen, meaning that our customers have a negative price sensitivity , and when we lower the price, sales also drop. However, this may be due more to other issues related to psychology. For some products, a price that is too low is seen as something negative, due to issues of quality, safety, or image. Think of health-related services, or products such as clothing or vehicles that are symbols of social status.