Why is price sensitivity important?

Analyzing and keeping track of your price sensitivity is of pivotal importance. You can gauge the impact of a price change on your revenues and your customer's behavior.

Price sensitivity also assists you in analyzing the best situation to change prices and fully reap its benefits. Furthermore, knowing the product's price sensitivity helps you understand the product's value and the customer's willingness to pay.

By definition, it means how the demand of a product/service changes based on change in its price. It helps you find out the value your product is creating by gauging customers willingness to pay when the price changes (low/high). By studying your customers behavior, you can decide how to implement price changes.