price sensitivity
Price sensitivity is how much a change in price makes people buy more or less of something, and every market has its own limit.
In plain English
A woman in Yaba will trek an extra twenty minutes to buy tomatoes for ₦50 less per basket, comparing three sellers before she settles. The same woman, standing in front of a generator that just died at 11pm with a house full of guests, will pay whatever the mechanic asks without blinking.
That is price sensitivity in one household. Tomatoes have many sellers and no urgency, so people shop around and punish anyone who charges more. A broken generator at night has few options and real urgency, so people pay up without complaint.
Every product sits somewhere on that scale. If you sell something people can easily compare and easily delay, your customers are price sensitive, and a small increase can send them running to a competitor. If you sell something urgent, rare, or hard to compare, like emergency plumbing or specialist school tutoring, customers care far less about the naira amount and far more about getting the problem solved now.
A small business owner in Lagos selling phone chargers on a busy road is fighting price sensitive customers every single day, because chargers are everywhere and buyers will haggle over ₦200. A UK based Nigerian running a niche visa consultancy for relatives back home faces a different customer, one who is anxious, time pressed, and willing to pay a proper fee because the alternative, getting it wrong, costs far more than money.
Knowing which kind of customer you have changes everything about how you price, market, and even how you talk about your product. Price sensitive markets reward volume and low margins. Price insensitive markets reward trust, speed, and being the obvious safe choice.
A generator repair shop notices customers barely react when call out fees rise from ₦3,000 to ₦5,000, because at midnight nobody wants to negotiate. But when the shop tried raising the price of bottled water it resells from ₦150 to ₦250, sales dropped sharply, because water is easy to buy elsewhere.
Questions people ask
How do I know if my customers are price sensitive?
Watch what happens when you change price slightly. If a small increase causes people to disappear or complain loudly, and a small decrease brings a rush of buyers, your market is price sensitive. If price changes barely move behaviour, your customers care more about something else, like trust, speed, or lack of alternatives.
Can a business change how price sensitive its customers are?
Yes, to some degree. Building a strong brand, offering something genuinely different, or creating urgency and trust can make customers care less about small price differences. This is why two shops selling nearly identical shoes can have very different pricing power, one has simply earned more loyalty.
Is low price sensitivity always a good thing for a business?
It sounds attractive, but it usually comes with responsibility, since customers who cannot easily compare prices are trusting you not to exploit that. Businesses that abuse low price sensitivity, like overcharging in emergencies, often win once and lose the customer forever.
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