Price sensitivity analysis is the process of measuring how changes in price affect customer demand and buying behavior.

It looks at how likely customers are to buy at different price points and identifies where demand starts to drop, stay stable, or increase. The goal is to understand how sensitive customers are to price and where pricing has the most impact.

This analysis is often done using methods such as surveys, historical sales data, A/B testing, or techniques like Van Westendorp or conjoint analysis. It helps estimate acceptable price ranges, optimal price points, and thresholds where pricing becomes too high or too low.

In B2B, price sensitivity analysis is usually done by segment, since different customers respond differently to price. Factors like budget, urgency, perceived value, switching costs, and alternatives all affect sensitivity.

Price sensitivity analysis is used to support pricing decisions such as setting price levels, adjusting pricing, reducing unnecessary discounting, and improving packaging. It also helps companies understand where they can increase prices without losing demand.