Elasticity is the change in quantity demanded by the change in price for goods and services. Price elasticity helps us understand how supply and demand for a product will change if the price increases. It measures the market's response to those changes in order to determine how dramatic of an impact it will have. It's important to consider elasticity when making pricing decisions so you can know how it's going to affect consumers and their willingness to pay for your products. For instance, will a price increase cause you to lose customers? Or would offering a discount increase sales production cost? These are some things to consider when trying to maximize your pricing objectives. Relying solely on costs can be risky because of potential market changes. Market changes can and will drive price changes.Another reason is to consider what factors affect the market price of a company. As the market changes, the demand from consumers will change. You can't rely merely on cost without understanding the demand for products and services.