Summary - PED - Price Elasticity of Demand

PED - Price Elasticity of Demand

Why is marketing related to PED?


- Demand is part of the Profit Formula – QTY

- Price comes into marketing objectives

- Marketing takes decisions on price


What is PED and what do you need to find out?


When you change the price of a product or a service what is the impact on demand?

You need to know this because it will affect your sales revenue (the money coming in)


General concept


- If the price is INCREASED – Demand will always go DOWN
- If the price is DECREASED – Demand will always go UP
- = Inverse relationship



Elastic – Moves a lot

Inelastic – Doesn’t move a lot



PED will always be a minus number – because when one goes up the other one goes down




Formula: