Price elasticity measures how much unit sales change, in percentage terms, for a given percentage change in price. On elastic products a small increase cuts volume noticeably; on inelastic products a price rise barely moves volume. It puts price increase and discount decisions on measurement instead of guesswork. Measuring it requires a period in which price is the only variable.
The price change has to be made under control, with ad budget and campaigns held constant over the same period; otherwise the effects blend together. A common mistake in Turkey is to read the effect of a mid-season price increase as elasticity. Branded, directly comparable products show high elasticity on marketplaces because the customer picks the same item on price; own-brand products with no equivalent show low elasticity. A measured increase on inelastic items grows profit faster than ad optimization does.
Elasticity = % change in units ÷ % change in price
If a 10 percent price increase drops units by 6 percent, elasticity is 0.6; in that case both revenue and contribution margin rise.
The price change has to be made under control, with ad budget and campaigns held constant over the same period; otherwise the effects blend together. A common mistake in Turkey is to read the effect of a mid-season price increase as elasticity. Branded, directly comparable products show high elasticity on marketplaces …
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