Price Sensitivity Heatmap
Visualize elasticity across your entire portfolio. Identify which segments are price-sensitive (Red) and which are price-insensitive (Green) to optimize targeting.
Matrix Strategy
Target the Green, Protect the Red.
Green Zones (Low Sens)
Raise Prices. These segments perceive high value and have budget. Capture the surplus.
Red Zones (High Sens)
Optimize Cost or Discount. These segments are at risk. Strip out features to lower cost or offer 'Starter' discounts.
Yellow Zones (Med Sens)
Monitor. These are your baseline. Use small tests to see if they can be moved to Green.
Execution Steps
Define your Products (Rows) and Customer Segments (Columns).
Click the grid cells to toggle sensitivity: Red (High), Yellow (Med), Green (Low).
Green cells represent opportunities to raise prices or cross-sell.
Red cells represent risks where discounts or bundles are needed to win.
Pro Strategy
- If your 'Enterprise' segment is Red, your value proposition is weak. Enterprise should ideally be Green (Low Sensitivity) because they have budget.
- Avoid raising prices on Red segments; you will cause churn. Instead, introduce a cheaper 'Lite' tier for them.
- Focus upsell efforts on Green segments. They are signaling that they value your product highly.
Core Concepts
Price Discrimination
Charging different prices to different segments based on their willingness to pay. This heatmap identifies where that is possible.
Inelastic (Green)
Customers here don't care much about price. They value time, quality, or security more. Maximize margin here.
Elastic (Red)
Customers here shop on price. You must compete on efficiency or lower your price to win volume.
What is Price Sensitivity Heatmap?
A Pricing Heatmap visualizes the heterogeneity of demand. Markets are rarely uniform; different customers value different products differently. This matrix forces you to segment your strategy rather than applying a 'peanut butter' price change across the board.
Best For
- • Portfolio reviews.
- • Segmenting marketing campaigns.
- • Designing discount rules.
Limitations
- • Qualitative input (unless connected to real data).
- • Static snapshot.
Alternative Methods
Elasticity Simulator
Mathematical calculation for a single product curve.
Industry Applications
See how this methodology generates real revenue uplift in different sectors.
Software Company
Flat growth.
Heatmap showed 'SMBs' were Red but 'Enterprise' was Green. Pivot to sales-led motion for Enterprise.
Airline
Filling seats.
Business travelers (Green) pay 5x more than Leisure travelers (Red).
Coffee Shop
Morning rush.
Commuters (Green) pay for speed. Afternoon students (Red) pay for wifi.