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Pricing Strategy » Price Elasticity

Methods Used by Quantium

There are two broad approaches used by the industry to determine customer price elasticity:

• Stated Preference - Quantitative research
• Revealed Preference - Analysing actual observed customer behaviour

Measuring revealed preference for observed price elasticity requires:

• Historic price variation, or at a minimum, price variation relative to competitors
• A detailed understanding of competitive position

Quantium has found that using revealed preferences to be a far superior method for analysing customer elasticity as it reflects the actual behaviour of customers and not hypothetical behaviour. In fact, we have observed numerous occasions where stated preferences vastly differ from actual customer behaviour.