Price elasticity of demand is a difficult topic. One quick and useful way to gage if you are maximizing your margin $ attainment is to look at the development of margin$/site visit versus your margin %. The latter metric is in many cases a good proxy for price competitiveness and has the advantage of being easily accessible for most.
In the this worked example below from a online retailer of cosmetics, I have plotted margin$ visit vs TM% in a 13 week quarter. Margin$ per quarter makes a sharp turn down TM% reaches the 25% level and margin$ generation starts trending downward. In this case, traffic in SV was flat over time – key impact is coming from conversion. Although this method can hardly be said to be scientific, and doesn’t control for all drivers in your business, it will give you an additional, back of envelope type tool.
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