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B2B ELASTICITY
Well executed B2B price increases typically reduce elasticity and grow revenue
B2B has relatively low elasticity
Differential price taking reduces elasticity
Sales engagement further reduces elasticity
Elasticity Drivers
•Number of alternatives
•Risk of change
•Switching costs
•Price transparency
•Supplier value
•Customer and product segments
•Shrinking customers
•Long-tail and low-margin SKUs
•Individual customer differences
•Consistent communication
•Value selling
•Selective negotiation
-1.5
-1.0
-0.5
Estimated
elasticity
Revenue Impacts
Negative
e.g., 4% price increase reduces revenue by 2%
Neutral
e.g., 4% price increase has no revenue impact
Positive
e.g., 4% price increase grows revenue by 2%
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