Dynamic Price Elasticity By Office Solution

A dynamic Price Elasticity visual in Power BI is a powerful way to analyze how changes in price impact the demand for products across different regions or categories.

Price elasticity of demand (PED) is an economic measure that indicates how much the quantity demanded of a good or service changes in response to a change in its price. It helps to understand consumer behavior regarding price changes and is a crucial concept in economics and marketing.

Key Components:

• Price Elasticity Heat Map: Comprises the product, region, and elasticity data table.
• Colors: The colors of the table range from five shades of green for values above fifty, to five shades of red for values below fifty, with fifty being white.
• Price Elasticity: Price elasticity of demand (PED) measures how much the quantity demanded of a good responds to a change in its price.
• Elasticity Value: Calculated using old price, new price, old quantity, and new quantity values.

Price Elasticity of Demand (PED) Formula: % Change in Quantity Demanded / % Change in Price

Basic Features:

• Data Required: Product, Region, Old Price, New Price, Old Quantity, New Quantity.
• Tool Tip: Shows product, region, current price, current demand quantity, elasticity value, and projected revenue change.
• Color Legend: Displays color usage for elasticity values.
• Total Revenue Impact: Calculated as (TR2−TR1), where TR1 = P1 × Q1 and TR2 = P2 × Q2.
• Average Elasticity Value: Average Elasticity = ∑ Elasticity Values / N (where N is the number of elasticity values).

Premium Features:

• Logo Removal: Premium version supports logo removal.
• Price Slider: Adjust the price elasticity value display within the elasticity table, updating other values accordingly.
• New Projected Revenue: Represents expected revenue based on price changes and quantity adjustments due to elasticity.
• Change in Demand: Shows how quantity demanded responds to a price change.
• Increase/Decrease in Revenue: Reflects how price changes affect overall sales revenue based on elasticity category.
• Change in Profit Margin: Indicates the percentage change in profit margin over a specific period.

Use Cases:

• Market Analysis: Visualize demand sensitivity across products and regions, helping businesses identify products most affected by price changes.
• Pricing Strategy: Assess price elasticity for various products to optimize pricing strategies, maximizing revenue and profitability.
• Product Development: Inform product development decisions by understanding how pricing changes could influence consumer behavior.

Conclusion:

A price elasticity heat map is a powerful analytical tool that visually represents the sensitivity of consumer demand to price changes across various products and markets. By highlighting elastic and inelastic demand, it empowers businesses to make informed pricing strategies, optimize revenue, and enhance marketing efforts tailored to specific consumer behaviors. This dynamic visualization facilitates quick adaptations to market shifts, allowing financial companies to seize opportunities and allocate resources efficiently, ultimately driving improved performance and competitive advantage.

Note:

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