Why do some products fly off the shelves with a small discount, while others barely move even with a massive price drop? The answer lies in a powerful concept: price sensitivity.

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In today’s competitive landscape, pricing isn’t just about numbers but psychology, perception, and smart strategy. Companies often make the mistake of treating all products or customer segments the same. But when you understand your customers' sensitivity to price changes, you can unlock better profits, smarter promotions, and deeper customer loyalty.

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Let’s dive into what price sensitivity is, how it differs from a similar-sounding concept — price elasticity, and explore 4 powerful use cases of price sensitivity that can drive real impact in your business.

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What is Price Sensitivity?

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Sensitivity pricing measures multiple granular factors that drive the purchase decision of a customer. These factors are product lifecycle, competitive intensity, brand value, buying frequency, price change frequency, stock type, customer type and more.

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Typically, to combat the change in buying behaviour when price changes, pricing teams use a price elasticity strategy. This balances the sales volume and profit margin through price optimisation based on real-time demand.

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But, this may not be applicable for all products in your portfolio. Other products may need a deeper analysis based on other regular and specific factors, as we mentioned. This is where the sensitivity pricing strategy comes into play.

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• Price sensitivity allows you to go beyond just price and volume. This way, you can set more advanced pricing for those products for which the elasticity strategy won’t fit.

• The factors that affect the price sensitivity of a product are more specific and granular.

• This allows you to combine the expert judgement of humans and the analytical power of Machine Learning. With the best of both of these worlds, you can become a Hyperlearningᵀᴹ organisation.

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How is Price Sensitivity Different from Price Elasticity?

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Although often used interchangeably, they’re not quite the same.

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• Price Elasticity is an economic formula: the percentage change in demand divided by the percentage change in price. This strategy has limited scope for price optimisation. It focuses only on the connection between price and quantity.

• Price sensitivity, on the other hand, is more actionable. It’s often based on behavioural patterns, scores, or insights from a price sensitivity meter, which helps businesses make strategic decisions.

• Price elasticity needs large volumes of clean datasets and is often not applicable for your entire product catalogue. Also, it’s not suitable for all businesses or contexts.

• On the other hand, price sensitivity starts from where price elasticity stops. It’s applicable to whole catalogues and all business contexts.

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So, while elasticity gives you a number, sensitivity pricing gives you a roadmap — a tool to plan and adjust real-world pricing strategies across different products and customer groups.

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4 Use Cases of Pricing Sensitivity in Business

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Price sensitivity strategy has multiple use cases in business. We have discussed the 4 main use cases that address most problems that business owners face with pricing, discounting and margin growth!

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Use Case 1: Smarter Price Experiments to Improve Margins

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After analysing your sales data and customer response, you can assign a price sensitivity meter score to each product. This score becomes your north star for sensitivity pricing experiments.

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• Products with low pricing sensitivity can handle price increases with little to no sales drop.

• Products with high pricing sensitivity require careful handling — even small changes could impact demand.

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This use of sensitivity pricing helps you optimise margins by avoiding blanket price changes. Instead, you make targeted tweaks that respect the product’s real-world behaviour. Among the most practical price sensitivity uses, this one immediately improves profitability with low risk.

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Use Case 2: Product Grouping based on Sensitivity for Smarter Discounting

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Many companies over-discount, often applying a flat rate to entire portfolios. But with price sensitivity data, you can pinpoint exactly which products truly need a discount to move. You need to focus on discounting products that are price-sensitive for the customers. This is especially critical in B2B, where large buyers expect discounts, but not every product deserves one.

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Here’s how you use this insight:

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• Group products based on their price sensitivity meter scores.

• Apply discounts only to high-sensitivity items.

• Maintain standard pricing for low-sensitivity ones.

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This sensitivity pricing strategy ensures you protect your margins while still giving customers the feeling of a good deal. It’s one of the most overlooked but powerful use cases of price sensitivity in modern sales.

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Also Read: Product Bundle Pricing Strategy

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Use Case 3: Targeted Promotions that directly Drive Revenue

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Setting promotions should not be random. They should be strategic tools informed by pricing sensitivity. By identifying which products are highly price sensitive, especially in e-commerce, you can:

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• Use them to drive traffic during sales campaigns.

• Increase visibility of products that act as “door-openers.”

• Bundle high-sensitivity items with others for upselling.

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A great example? Supermarkets discounting beer, a known price sensitivity magnet, to attract foot traffic. Customers arrive for the beer but end up buying snacks, soda, and more. This is a textbook case of price sensitivity that drives broader business impact, not just on a single product, but on overall revenue.

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Also Read: Key Value Items Pricing Strategy in Retail and E-Commerce

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Use Case 4: Setting the Right Price Position Across Your Portfolio (Manufacturing)

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How do you know if you're pricing too high, too low, or just right? By mapping your products using a price sensitivity meter alongside value perception, you can see:

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• Which products can justify a higher price due to low pricing sensitivity?

• Which products require competitive pricing due to high sensitivity pricing?

• Where gaps exist in your lineup.

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Also Read: Pricing Challenges in Manufacturing and How to Overcome It?

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This allows you to define your optimal price position — not just for one product, but for your entire portfolio. It's an essential part of a comprehensive sensitivity pricing strategy, especially for manufacturers and brands trying to stand out in crowded markets.

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Price sensitivity is more than just a trend — it’s a tool for smarter, more responsive pricing decisions.

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From promotions to portfolio strategy, the price sensitivity explored above offers a clear path to increased revenue, better margin control, and improved customer relationships. By using a price sensitivity meter, you gain the insight needed to run better campaigns, create value-based discount strategies, and confidently manage your price positioning.

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Symson’s price sensitivity solution is a powerful function that allows you to set optimal pricing for those products for which the elasticity strategy has limitations in optimising. Whether you’re new to sensitivity pricing or looking to refine your approach, there’s no better time to start.

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Want to see how a price sensitivity strategy could work for your business? Let’s connect and dive deeper.

To know more, you can download our in-depth whitepaper on Price Sensitivity here.

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