Price elasticity

Price elasticity measures the relative change of demand due to a change of prices. The calculation of price elasticity of a product becomes more complex if various drivers of demand (e.g. marketing spend or competitor prices) are changing at the same time. Generally, price elasticities modeled along various price points follow a nonlinear function. Additionally, many influencing factors (e.g. seasonality) have to be considered when calculating price elasticity. Advanced machine learning methods (e.g. recurrent neural networks) can be used to calculate price elasticities more accurately.