Lextree Simply the best software for managing legal entities and documents.
The Berkman Letter Practical analysis and commentary for business, law, and more.

How can I estimate the impact of a price change on our sales volume?

0
stars
1
answer
1092
views
Considering an across the board 10% price increase and need to assess what impact it will have on volumes.
Answers
0
stars
Understanding elasticity of demand for your products and services either requires testing or reference data on similar products in your market. If you have previously adjusted product prices, then the historical data or reference data collected on competitive products regarding any changes in volume that resulted from past price changes will be a valuable resource in estimating the impact of a proposed change (i.e. if prices were previously increased by 5% and volume declined by 5%, you could extrapolate those results to estimate what might happen with the proposed price change). However, it is important to remember that the effects of price changes vary dramatically over time, so old data may not be useful due to major changes in market conditions. Conducting tests or surveys is another, and maybe the most important, data source in determining the impact of a price change. If you have the ability to test price changes in representative markets on a small scale or gather credible customer feedback, you can more accurately assess the likely outcome of a proposed change.