• http://iamdavidboyd.com David Boyd

    Not even kidding, got through the first 2 paragraphs and said, “Gee, this sounds like a Dr. Sid article.” Not surprised to see that it is. Thanks for another great share!

    -DBoyd

  • http://blog.efrontier.com sidshah

    Thanks David. It looks like there are other data nerds out there. How reassuring and flattering !

    Sid

  • glynpowditch

    Hi Sid,

    In managerial economics, even assuming a price elasticy of demand line of 45 degrees, when prices are high near to the vertical axis, consumers will be naturally more price sensitive. Equally towards the bottom of the curve, maths dictates that nearer the horizontal axis, consumers will be more insentive to price changes. In practice this is true as well. On luxury goods, for example, even a small reduction in price with generally result in a greater percentage demand in quantity. However, on small convenience items that are homogenous in nature, consumers are much less price sensitive. Anyone who’s ever conducted an mvt test on a website selling high value items will know that moving a few items on the page around doesn’t have the same impact, if any, that you find on low cost transactional items tests. However, shift the price on high value items and all of sudden your conversion rockets.

    Thanks for the great article.

    Glyn