If you raise the price, how many customers do you lose?
Direct answer
Price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price. Elastic goods see big changes in demand when price moves. Inelastic goods, such as essentials, change less. Test price changes carefully to learn.
Example
If you raise the price by 10 percent and sales fall by 5 percent, elasticity is −0.5, so demand is inelastic and revenue likely rises.
How to use it
- Test small changes.
- Watch sales, not just price.
- Consider different customer groups.
Where Teyro fits
Teyro's How to Price a Product or Service course turns this into short lessons you can play in a few minutes a day. It has 50 lessons, and you can start free.
The bottom line
Learn how sensitive your customers are before changing prices.
