Macro-Economic Environment and the North American Price Sensitivity Index (PSI)
Understanding price sensitivity in the marketplace allows lenders to make pricing decisions relative to overall consumer tolerance. By aligning pricing to consumer tolerance, pricing can be used to grow margins when price sensitivity is low and retain market share when it is high.
In order to measure price sensitivity within the macroeconomic environment, Nomis Solutions has launched the North American Price Sensitivity Index (PSI). Lenders who wish to find new opportunities for business growth can subscribe to the PSI
for no-cost guidance in making more strategic and profitable pricing decisions.
The following chart represents the range of price sensitivity within the consumer lending market over a six-year period.
When price sensitivity is high, consumers are less tolerant of price increases. Financial institutions can take advantage of this information to pinpoint prices that will best grow their customer base, without sacrificing too much margin.
Conversely, when price sensitivity is low, lenders can afford to price for large gains in margin - and grow overall profitability.