How do you set your price?
Price elasticity is a pretty interesting topic to discuss when you are trying to consider the right price to set your product at.
For those of you who haven't had the opportunity to learn about economics, price elasticity, in short, is this:
Your price is highly elastic if you can raise your price a lot and very few people will continue to purchase. Gas is one example. Gas price has gone up $2.00 in the last 15 years and we are buying more gas than ever.
Your price is not so elastic if you raise your price and many people choose not to buy. Home loans may be a good example of this. When the interest rate goes up, people stop getting new loans.
It all has to do with the supply and demand. The more the demand, the greater the elasticity of the product.
So, how elastic is your product? How much can you raise your price and not lose your key customers?
Corey Smith is the Vice President of Innovation at Fisher’s Document Systems where he maintains a blog on business and technology.
Corey Smith is the Vice President of Innovation at Fisher’s Document Systems where he maintains a blog on business and technology.
Corey Smith is a businessman, writer, technology fanatic, graphic designer and web developer.
He is the webmaster for CopierCatalog.com, the Chief Web Architect for Dealer Marketing Systems, the Editor in Chief for OfficeProductNews.net and the VP of Technology for Seybold Scientific.
You can find him on Twitter, FriendFeed, and LinkedIn.
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Submitted by Does more revenue equal more profit? - Master the Business - (not verified) on Tue, 06/26/2007 - 12:02.
[...] your product is elastic, you might be able to do both… I don’t know that it is as simple as that. I wonder if [...]
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