ou Need to Know About Price Elasticity of Demand in E-Commerce

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Price elasticity of demand is not a pricing strategy, it is an attribute that all product prices embody – only the level of elasticity (or inelasticity) changes. Understanding the price elasticity of demand for your products will help you make better e-commerce pricing decisions.

Quick Overview: What is Price Elasticity of Demand in E-Commerce?
Let's start with a quick rundown of the basics. In short, price elasticity of demand measures how much an increase or decrease in price will affect the demand for a good.

Most goods traded in the world are elastic – some kazakhstan phone number list are more elastic than others, meaning that demand for them will increase when prices fall, or vice versa. On the other hand, some goods are relatively inelastic – meaning that changes in price will not affect demand for them much (but this is not very common in e-commerce).

Let's first look at some examples of both categories to better understand the difference.

Products with extremely elastic prices tend to be luxury or nice-to-have products where the consumer has many choices and where there are many alternatives at the time of purchase, such as:

Consumer Electronics : Most types of consumer electronics have multiple options at different price points. If you sell wireless headphones and raise your prices by 20%, you'll likely see a significant drop in both demand and revenue.
Clothing. If you sell plain white t-shirts, sweaters, or jeans, consumers have a huge number of substitution options, meaning that in many cases, demand for your white t-shirt is largely dependent on price. Conversely, people tend to pay “extra” for luxury items with added perceived value.
Goods with highly inelastic prices are typically necessities for which there are no substitutes, monopolized goods, or goods with extremely intense competition or low availability, such as: