Price Sensitivity Analysis

Price Sensitivity Analysis is a method used to understand how much the price of a product affects consumer purchasing decisions. It involves examining how changes in price can lead to changes in demand: if consumers buy significantly less when prices rise, they are considered price-sensitive. Conversely, if demand stays relatively stable despite price changes, they are price-insensitive. Businesses use this analysis to determine optimal pricing strategies, ensuring they maximize sales and revenue while remaining competitive in the market. Essentially, it helps companies understand the relationship between price and consumer behavior.