Price Elasticity of Demand

A measure from economics of how demand responds to price: the percentage change in quantity demanded relative to the percentage change in price. Demand is called elastic when the demand response outruns the price change, and inelastic when demand barely moves. The construct assumes conditions that consumer markets sometimes meet and enterprise software rarely does: a posted price every buyer sees, a high volume of comparable transactions, and a purchase decision that responds to price alone. In B2B software the realized price is negotiated per deal, annual deal counts run to dozens or hundreds rather than millions, no two deals carry the same configuration or volume, and a buying committee weighs risk, integration, and switching cost alongside price. A clean elasticity curve cannot be estimated from that data, which is why precise elasticity coefficients quoted for enterprise software should be treated with suspicion: ask what transactions they were computed from.