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Price Elasticity Isn’t Rocket Science

Our subscriber-only webinar, Business-to-Business Price Elasticity, continues to be one of our most popular webinars. Our subscribers regularly access it on-demand and are clearly very interested in learning more about this important and often misunderstood topic. And as price elasticity is arguably the most powerful measure in pricing—B2B or otherwise—their interest is absolutely justified.

But not everyone was happy with our treatment of the topic…

After the live webinar session, a consultant friend chided me via email about using such simple explanations and examples to discuss a topic that, in his opinion, was much more complex and intricate. Simply put, my equation was too small.

Of course, I realize that my friend was just teasing. And, I’m sure he now realizes that I’m not afraid to publicize his snarky and unsolicited opinions. However, I believe my friend’s comments also reveal a self-defeating dynamic that is all-too-common in the world of pricing today…

On the one hand, pricing vendors and practitioners alike will express frustration about how pricing is still not getting the attention and focus that it really deserves. But on the other hand, we all seem to insist on making fundamental pricing concepts seem so incredibly complex and esoteric as to be virtually unintelligible—not only to those whose support and attention we’d like to garner, but even to our peers in the pricing community!

As powerful as the concept of price elasticity is, we know that most B2B pricers are not leveraging it. And, we know that the vast majority of pricing decisions are still being made without the foreknowledge of volume, revenue, or profit implications that an understanding of price elasticity could provide.

Why is this? Why is the most powerful measure in pricing going unused? Why is the most powerful pricing tool being left in the bottom of the pricing toolbox?

The concept of price elasticity isn’t rocket science. But in my opinion, when we continue to talk about it in terms that only a PhD in mathematics can appreciate, we aren’t doing our businesses, our peers, or the pricing profession, any favors.

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