Price Sensitivity

Price Sensitivity

Price Sensitivity Jonathan Poland

Price sensitivity is a measure of how much the demand for a product or service decreases as the price increases. It can be seen as the drop in conversion rate as the price of a product or service goes up. The degree of price sensitivity varies greatly among different customers, with some individuals being more willing to pay higher prices than others. For example, businesses and governments may be willing to pay more for a product or service than individual consumers.

Pricing strategies often take price sensitivity into account by offering different prices to different customers based on factors that indicate their level of price sensitivity. For example, an airline may offer lower prices for tickets that require a Saturday night stay, as this is typically a signal that the customer is a business traveler who is less sensitive to price. This allows the airline to target their pricing more effectively and maximize their revenue.

Here are some examples of price sensitivity:

  1. Customers who are willing to pay a premium price for a high-quality product or service
  2. Customers who are shopping on a tight budget and are very sensitive to price increases
  3. Customers who are loyal to a particular brand and are less sensitive to price changes
  4. Customers who are willing to switch to a competitor’s product or service if the price is lower
  5. Customers who are willing to pay a higher price for convenience or time savings
  6. Customers who are price sensitive when it comes to purchasing necessities, but less sensitive when it comes to luxury items
  7. Customers who are price sensitive when it comes to products or services that they use frequently, but less sensitive when it comes to infrequently purchased items
  8. Customers who are price sensitive when it comes to products or services that have many substitute options available, but less sensitive when it comes to products or services with few substitutes.
Learn More
Settlement Risk Jonathan Poland

Settlement Risk

Settlement risk is the risk that a trading counterparty will not deliver a security or asset as agreed upon in…

Product Transparency Jonathan Poland

Product Transparency

Product transparency refers to the practice of providing extensive information about products and services, including their ingredients, production methods, and…

Brand Engagement Jonathan Poland

Brand Engagement

Brand engagement refers to the interaction between a customer and a brand, and can be used as a way to…

Types of Raw Materials Jonathan Poland

Types of Raw Materials

A raw material is a basic and unprocessed resource that is used as an input in the production of goods…

Project Goals Jonathan Poland

Project Goals

Project goals refer to the desired business outcomes that a project aims to achieve. These goals are typically outlined in…

Target Market Jonathan Poland

Target Market

A target market is a specific group of consumers that a business aims to sell its products or services to.…

Key Employees Jonathan Poland

Key Employees

Key employees, or key personnel, are individuals who possess unique skills, knowledge, or connections that make their prolonged absence or…

Autonomous Technology Jonathan Poland

Autonomous Technology

Autonomous technology refers to technology that is capable of functioning independently and adapting to changing real-world conditions without human intervention.…

Cost Benefit Analysis Jonathan Poland

Cost Benefit Analysis

Cost-benefit analysis (CBA) is a systematic approach to evaluating the costs and benefits of a project, program, or policy to…

Content Database

Search over 1,000 posts on topics across
business, finance, and capital markets.

Pricing Strategies Jonathan Poland

Pricing Strategies

Pricing strategy involves deciding on the right prices for a company’s products or services in order to achieve specific business…

Message Framing Jonathan Poland

Message Framing

Message framing is the way in which information and communications are constructed and presented. The way a message is framed…

Agile Change Management Jonathan Poland

Agile Change Management

Agile change management is the practice of leading continuous delivery processes in which changes are shipped within weeks. This approach…

Product Innovation Jonathan Poland

Product Innovation

Product innovation refers to the development and introduction of a product or service that significantly improves upon existing offerings, often…

Administrative Burden Jonathan Poland

Administrative Burden

Administrative burden refers to the workload and effort required to comply with laws and regulations that do not directly contribute…

Internal Branding Jonathan Poland

Internal Branding

Internal branding involves creating a strong brand identity within the company itself, rather than just focusing on marketing to customers.…

What is a Lifestyle Brand? Jonathan Poland

What is a Lifestyle Brand?

A lifestyle brand is a type of brand that is designed to appeal to a particular way of life or…

Niche Market Jonathan Poland

Niche Market

A niche market is a small and specialized target market that is characterized by unique needs, preferences, and perceptions. These…

Narrative 101 Jonathan Poland

Narrative 101

Sales and marketing are the lifeblood of business and should be integrated into one function to drive business and brand narrative.