A small price cut will cause a larger increase in demand and revenue. A small price increase will cause a larger decrease in demand. Both demand and revenues change with price changes. What Determines Price Sensitivity 1. You need to anticipate how customers are likely to react to higher and lower prices.
Customers are more sensitive to price when they can choose among products to satisfy needs.
When customers can't easily substitute another product. When they can't easily compare the value of competing products. Of products they see as necessities. When they anticipate better personal and general economic conditions. B. Customer Demand 1.