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November 17, 2016
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I'm trying to build a price sensitivity model to predict sales (and profit) when pricing fluctuates. Would appreciate any direction/examples from the community. Thank you!
VIP
April 21, 2015
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Maybe you're looking for scenarios? You find it here on MOTH: https://www.myonlinetraininghu.....-scenarios
Frans
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November 17, 2016
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Thank you, Frans. While that helps, it's not exactly what I was looking for. I have an item, let's call it Anna's Banana Magnet.
Markey's Market sells this item for $1.29. At that price, average weekly sales are 50 units.
Markey's Market's cost for this item is $0.40 all in.
I'm trying to convince Markey's Market to sell the item for $0.99 because I project volume will double. But I also want to add in other price points between $0.99 and $1.29 to show Markey that he has many pricing options that work better than $1.29.
I have looked at price elasticity and price sensitivity models, but none so far have helped me to build out an Excel template for the sales team that is simple to understand.
Anna
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April 21, 2015
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Hi Anna,
I made an example to check if I understand you well. See this Excel sheet.
If this is correct, you can make some differences but you always have to know in advance how many objects you think you are going to sell for a certain price. In my scenario 3 I made that for 75, but maybe Markey's Market thinks they are going to sell only 60 units for that price? But you can calculate that of course also. Do you want to see these different options on one row (as I did now), or only when you fill some parameters in on a sheet and then look for the outcome?
Frans
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November 17, 2016
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Thank you, Frans. I've been traveling quite a bit and just saw your post. The outcomes would be parameter-driven based on historical sales. A price elasticity (aka sensitivity) model is generally based on several different parameters, including price, cost, sales, etc. Very tedious to build out, so was looking for one I could adapt to my needs.
Really appreciate your input.
Anna
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