Fresh Idea – Best Advice change old idea with fresh opinion & best advice

Elasticity price

The first thing you need to find out is how responsive your market is
to a change in price. This responsiveness is called elasticity.
Products such as eggs, baking soda, razor blades, and medicine are
highly inelastic. Regardless of whether their prices are raised or
lowered, customers continue to purchase them in approximately the same
quantities. Customer demand for some products, on the other hand,
fluctuates with the price. A small change in price up or down, results
in a decrease or increase in the number of units sold. This type of
response is said to be elastic. For example, television sets,
strawberries, clothing, and jewelry are highly elastic. As a rule,
items considered to be necessities are less elastic than those
considered to be luxuries. This is because the customer’s need, rather
than the product’s price, triggers the purchase of necessities.

For instance, a person with a headache doesn’t wait until aspirin is
on sale before buying it. The need to get rid of the headache takes
priority over the price. For one thing, the more inelastic your
product is, the easier it is to raise your prices without hurting your
sales. That means greater profits on the same volume. To increase your
profits on highly elastic products, rather than raising your prices,
you might try lowering them. Although this reduces your profit on each
unit sold, the resultant increase in sales volume should increase your
overall profits.