Understanding whether your product has elastic or inelastic demand is the first step to any pricing decision.
Inelastic demand examples (|PED| < 1)
Salesforce CRM: after 3 years of integration, switching cost is enormous. Price increases of 5–10% annually have little demand impact.
Enterprise software with deep integrations: ERP systems like SAP or Oracle are deeply embedded in operations. Users have no practical substitute.
Utility-like services: payroll software (ADP, Gusto) processes every paycheck. A 20% price increase is cheaper than the friction of switching.
Pharmaceuticals (branded drugs): doctors prescribe by brand; patients rarely price-shop; demand is inelastic until a generic appears.
Elastic demand examples (|PED| > 1)
Commodity SaaS (e.g. basic project management): many alternatives at similar price points. A 30% price increase triggers comparison shopping.
Consumer e-commerce (non-brand): shoppers compare prices on Google Shopping; any price above the market cheapest leads to cart abandonment.
Freelancer platforms: if you raise platform fees, freelancers shift to competitors. The switching cost is low and the alternatives are plentiful.
The key driver: switching cost
The biggest determinant of elasticity for B2B products is switching cost. The higher your switching cost (data lock-in, integrations, training), the more inelastic your demand.
Use the price elasticity calculator to model the revenue impact of a price change at any elasticity.