How Price Elasticity Affects Your Consumers
One of the hardest decisions in running a business is setting your prices for your products/services. If you undersell, you’ll go bankrupt. If you oversell, there’s a chance no one will buy it. If you make just enough, then you’ll only break even. Once you find that sweet spot where you are making a profit and your consumers are consistently buying, you’ll have successful businesses. But have you ever wondered if your consumers would pay more for the same products/services without you having to change anything? Here’s where price elasticity comes into play.
How Price Elasticity Works
Think of your prices as a rubber band. The more elasticity you have, the more you can stretch your cost, meaning you can increase your product’s value, and your consumers will still choose your brand over the competition. The lower your elasticity is, the more you can stretch your cost. Meaning if you increase your prices, your consumers will still buy your products. The higher your elasticity, the higher the chance your consumers will have a new favorite brand -Hint! Not yours.
The best thing about having a loyal customer is that they believe and trust your brand, product, and services. When a customer has this level of trust, you have a strong pricing inelasticity. So when you increase your products’ value from $5 to $8, your consumers will still choose your brand over the competition. Your consumers will pay this “premium” price because they trust and believe in your brand; this is the power of having a strong pricing elasticity.
Let’s Stay Connected
If you enjoyed this advice, go check out my blog “Listen Up Brains” where I share advice to my fellow creators, designers, and strategist. Also, connect with me on my other social media platforms to see some of the projects I’m currently working on.