Price elasticity of demand is a measure of how much customer demand changes when price changes. It helps businesses understand whether buyers are highly sensitive to price or likely to keep buying even as prices increase.

When demand falls significantly after a price increase, demand is elastic. When demand stays relatively stable despite a price change, demand is inelastic. This is shaped by factors like competitive alternatives, switching costs, urgency, perceived value, market saturation, and how clearly a company communicates differentiation.

In B2B, price elasticity of demand is not the same across every customer or segment. Larger accounts, buyers with higher switching costs, or customers with clear ROI may be less price-sensitive, while smaller accounts or highly competitive segments may respond much more strongly to price changes.

Understanding price elasticity of demand helps companies make smarter pricing decisions. It shows where price increases are sustainable, where discounting is unnecessary, which buyers are most price-sensitive, and how pricing, packaging, and value communication can be improved to protect margin and support growth.