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Louis Chino Creations
Hi Robert. You should definitely connect with a rep that understands your category to work through this, and your accountant or finance manager will likely have some important input as well. With that said, you should think of this problem as optimizing two variables (gross margin and volume). As a start, calculate the historical price elasticity of your product (s), and then determine how much margin you're willing to sacrifice for a given volume increase. We have an article on price elasticity in our Knowledge Base you can check out: "Price elasticity (of demand) measures how sensitive demand for a product is to changes in the product’s price. A product with high price elasticity will see a sharp increase (or decrease) in demand for every percentage decrease (or increase) in the price. Products with low price elasticity show little change in demand from price changes (i.e. a medicine with no substitutes). Price elasticity is calculated by taking the percentage change in quantity demanded and dividing it by the percentage change in price ( Price Elasticity = change in quantity demanded / change in price)." https://help.replogic.com/understanding-product-distribution-and-retail/what-is-price-elasticity-and-how-is-it-calculated
Very helpful. Thank you!!
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