Price Sensitivity

Price sensitivity refers to how much a person's buying choices change when prices fluctuate. If a consumer is highly price-sensitive, they are likely to adjust their purchases significantly if prices rise or fall. For instance, they might switch brands or buy less of a product when prices increase. Conversely, if they are less price-sensitive, their purchasing decisions won’t change much with price changes. Understanding price sensitivity helps businesses set prices and forecast how demand might shift based on price adjustments, ultimately influencing their sales and profitability.