From the course: Data Analytics for Pricing Analysts in Excel

Unlock this course with a free trial

Join today to access over 25,300 courses taught by industry experts.

Scenario analysis in pricing

Scenario analysis in pricing - Microsoft Excel Tutorial

From the course: Data Analytics for Pricing Analysts in Excel

Start my 1-month free trial Buy for my team

Scenario analysis in pricing

“

- [Instructor] We've seen previously how we could develop a basic forecast for sales and profitability over time based on a compounded annual growth rate. What we want to do next is assess a variety of different scenarios given these conditions. So in particular, what we're interested in is whether we should raise or lower price over time and we're going to base this decision on profitability, of course. Now the key driver for our profitability is going to be price elasticity. If you recall, price elasticity was the change in sales relative to a change in price for a product. So a price elasticity of 1.0 meant that a 1% change in price leads to a 1% decline in sales. Alright, so what we want to do next is go through and evaluate how our profit will change. We've made some assumptions about what our price elasticity looks like over time. This would be based on our demand curve of course, but we'd have no way of knowing…

Contents