Framework for Developing Pricing Sensitivity Metrics PPT
This PPT slide, part of the 38-slide Pricing Strategy PowerPoint presentation, outlines a framework for determining a pricing strategy, focusing on price sensitivity. It emphasizes the importance of defining key inputs and assumptions that will guide the pricing model. The section titled "INPUTS/ASSUMPTIONS" lists several critical metrics, including Total Possible Score, Lowest Possible Score, Price Elasticity Score, Elasticity Factor Upper Bound, Point of Perfect Elasticity, and Threshold of No Elasticity.
The Total Possible Score is set at 15, indicating the maximum score achievable based on selected price sensitivity drivers. The Lowest Possible Score is noted as 5, which serves as a baseline for evaluating pricing effectiveness. Price Elasticity Score is indicated at 13, reflecting the responsiveness of demand to price changes. The Elasticity Factor Upper Bound is set at 150%, suggesting a limit on how much elasticity can be factored into the pricing model.
Point of Perfect Elasticity is listed as 12, which denotes the optimal point where price changes do not affect demand. The Threshold of No Elasticity is at 5.50%, indicating a minimum price point below which demand remains unaffected. The Calculated Elasticity Factor is derived at 117%, providing a quantitative measure of price sensitivity.
The slide also instructs users to modify assumptions in the yellow cells, highlighting the dynamic nature of these inputs. This flexibility allows for tailored pricing strategies based on specific market conditions and business objectives. Understanding these metrics is crucial for making informed pricing decisions that align with overall business strategy.
This slide is part of the Pricing Strategy PowerPoint presentation.
This Pricing Strategy framework is created by former McKinsey, BCG, Deloitte, EY, and Capgemini consultants. It teaches the Strategy Consulting approach to formulating a Pricing Strategy. Financial model also included.
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