Price Elasticity
Price elasticity of demand measures how much the quantity demanded of a product changes in response to a price change. A product is "elastic" if a small price increase significantly reduces demand.
Understanding price elasticity lets brands optimize pricing for maximum revenue rather than maximum volume. Commoditized products (e.g., USB cables) are highly elastic — a 10% price increase may cause a 30% drop in sales. Branded luxury items are inelastic — consumers accept higher prices for perceived exclusivity.
In ecommerce, elasticity varies by category, season, and even time of day. Consumer electronics are elastic during mid-cycle but more inelastic at launch when early adopters pay premium prices.
Pricing intelligence tools like GetStoreIntel help establish elasticity curves by surfacing competitor price changes and their observable effects on market positioning.