You've made the product. You've taken the photos. You've even picked a name for your store. Then you hit the pricing box and freeze.
If you sell handmade candles, beaded jewellery, rusks, skincare, printed tees, or custom mugs, this part can feel personal. Price too high and you worry people will scroll past. Price too low and you might work hard for almost nothing. Most new store owners in South Africa sit in that exact spot at the start.
That's where price elasticity helps. It sounds like an economics term from a lecture hall, but it's really just a simple way to understand how strongly buyers react when your price changes. And right now, it matters more than ever. E-commerce's share of total retail in South Africa jumped from less than 1% in 2019 to nearly 10% in 2025, which shows how quickly online buying has moved into the mainstream for small businesses and creators (Naspers ecommerce report).
If you're still getting comfortable with how pricing fields work in your store, this quick guide to the difference between original price and price can help you avoid a very common beginner mistake.
Table of Contents
- Are You Pricing Your Products Right
- What Price Elasticity of Demand Really Means
- Elastic vs Inelastic Demand in South Africa
- A Simple Way to Estimate Your Elasticity
- Smart Pricing Experiments for Your Shopstar Store
- Your Next Steps in Smart Pricing
Are You Pricing Your Products Right
A lot of new sellers start with a guess. They look at what a friend charges, peek at a few Instagram shops, add a bit extra for profit, and hope for the best. That's normal. But it's also why pricing often feels stressful.
Say you make polymer clay earrings in Durban or small-batch chilli oil in Joburg. You know your product has value. You also know your buyer can compare prices in seconds. So every rand feels loaded. If you charge R120, will they still buy? If you charge R95, will you sell more, or just earn less per order?
Practical rule: Pricing isn't about picking one “perfect” number on day one. It's about learning how your customers respond.
That response is what price elasticity helps you read. You're not trying to become an economist. You're trying to answer a much simpler question. When I change my price, what happens to sales?
Why this matters for small online stores
Online shoppers can compare products fast. They can open another tab, check Takealot, browse Instagram, or message a maker directly on WhatsApp. That means your price doesn't sit alone. It sits next to your photos, reviews, shipping cost, story, packaging, and brand feel.
For beginners, that's good news. It means a price change isn't your only tool.
A customer may happily pay more for:
- Better presentation with cleaner product photos
- More trust through clear returns, delivery info, and contact details
- A stronger story such as handmade, local, small-batch, or custom-made
- Convenience like easy checkout and local payment options
If your sales feel slow, don't assume your price is “wrong”. Sometimes the offer needs work. Sometimes the audience is off. Sometimes the product is fine, but buyers are more price-sensitive than you expected.
That's why we use price elasticity as a guide, not as magic.
What Price Elasticity of Demand Really Means
Price elasticity of demand is just a measure of how much demand moves when price moves. That's the formal version. The simple version is easier.
Think of a rubber band
Think about demand like a rubber band.
Some products have a stretchy rubber band. You pull the price up a little, and demand snaps down fast. You drop the price a little, and sales jump. Those products are elastic.
Other products have a firmer rubber band. You change the price, but demand barely shifts. Those products are inelastic.
That's the whole idea. We don't need scary graphs to use it in a small online business.
If you're building your confidence with numbers in business generally, this piece on mastering entrepreneurial finance is a useful companion. It helps frame pricing as one part of a bigger money skill set.
The three simple types
Here are the three commonly used buckets.
-
Elastic demand
A small price change leads to a bigger change in sales. This often happens when buyers have lots of alternatives or when the product feels like a “nice to have”. -
Inelastic demand
A price change leads to a smaller change in sales. Buyers still purchase, even if the price moves. This often happens when the product feels necessary, familiar, or hard to replace. -
Unitary demand
The price change and sales change move in roughly the same proportion. It's the middle ground.
If customers quickly switch, delay, or compare, demand is usually more elastic.
Where beginners often get confused
New store owners often think elastic means “bad” and inelastic means “good”. That's not true.
Elastic demand can be useful. If a small discount brings a strong sales lift, you've learned that promotions may work well for that product. Inelastic demand can also be useful. It can mean your buyers trust your brand enough to stay with you when prices rise modestly.
Another common mistake is thinking elasticity is only about cheap versus expensive. It isn't. A handmade leather wallet can be elastic if buyers see lots of similar options. A premium baby gift box can be less elastic if it solves a specific need and feels special enough.
What matters most is how your customer sees the product:
- Can they find a substitute easily?
- Can they delay buying it?
- Does your version feel different enough to justify the price?
Those three questions will often tell you more than a spreadsheet at the start.
Elastic vs Inelastic Demand in South Africa
South African examples make this easier to grasp because they show that the same country can have very different demand patterns depending on the product and the customer group.
Three Types of Price Elasticity
| Type of Elasticity | What It Means | Example Product |
|---|---|---|
| Elastic | Sales react strongly when price changes | Packaged foods with many alternatives, or handmade gift items buyers can compare |
| Inelastic | Sales react less strongly when price changes | Beer in the overall market |
| Unitary | Sales change in roughly the same proportion as price | A product sitting between very sensitive and not very sensitive demand |
What the South African examples tell us
In South Africa, beer demand for the overall market is estimated at −0.63, which is price inelastic. But for the low-income segment, beer demand is elastic, ranging from −1.03 to −1.16 (Nova Economics on beer elasticity in South Africa).
That tells us something important for ecommerce sellers. Your market is not one blob. Different customer groups respond differently to the same price.
If you sell natural hair products, stationery, or baby clothing, your audience matters just as much as your product. A university student shopping for a tote bag may react very differently from a working professional buying a gift set. The lesson isn't “copy beer pricing”. The lesson is that segment matters.
The average market view can hide what your real customer is actually doing.
For many small online stores, demand is often more elastic because shoppers have choices. They can compare your store with marketplaces, social sellers, craft markets, or other niche brands. That's one reason many founders spend time shaping the offer, not only the number.
You can also see this in how product positioning changes sensitivity:
- Generic items usually face more price comparison
- Custom items often give you more room because they feel less replaceable
- Bundles or gift sets can soften direct price comparison
- Wholesale and retail offers can create very different price expectations
If you sell both single items and bulk packs, it helps to understand how buyers think about each model. This guide on wholesale vs retail is useful because pricing logic changes when customers buy for resale versus personal use.
The practical takeaway is simple. Don't ask, “Is my product elastic?” Ask, “For which customer, in which format, at which moment, is my product elastic?”
A Simple Way to Estimate Your Elasticity
You don't need advanced software to get a useful first estimate. You can do a back-of-the-napkin version with your own store data.
The napkin formula
Use this:
Percentage change in quantity sold ÷ percentage change in price
That's it.
You're checking whether sales moved a little or a lot compared with your price move. The answer gives you a rough feel for how sensitive buyers are.
Here's how to think about the result:
- More than 1 in size means demand looks more elastic
- Less than 1 in size means demand looks more inelastic
- Around 1 in size means it's closer to unitary
You'll often see negative numbers in formal economics because price and demand usually move in opposite directions. For a beginner, don't get stuck there. Focus on the size of the response first.
A candle example you can copy
Let's say you sell scented candles.
Last month:
- Price = R80
- Units sold = 50
This month you run a small sale:
- Price = R72
- Units sold = 65
Your price dropped by 10%.
Your quantity sold increased by 30%.
Now divide the change in quantity by the change in price:
30% ÷ 10% = 3
That suggests your candle demand was quite elastic during that test. Buyers responded strongly to the lower price.
Here's the part beginners miss. That doesn't automatically mean “keep prices low forever”. You still need to ask:
- Did profit per candle shrink too much?
- Did the sale bring repeat buyers?
- Did people buy one candle only, or add wax melts and matches too?
- Was the jump caused by the lower price, or by a payday weekend, market exposure, or a social post?
Useful shortcut: Use this method to spot patterns, not to prove perfect truth.
South African research on food pricing shows how strong price sensitivity can be in some categories. Own-price elasticities for select food commodities range from −1.05 to −1.91, which means these markets are price-elastic, and a 10% rise in price can reduce demand by over 10% (South African food elasticity study). Your handmade products won't behave exactly like packaged foods, but the broader lesson is clear. Some categories respond sharply to price changes.
Keep your test clean
A rough estimate only helps if the comparison is fair.
Try to compare similar periods:
- Same product rather than different products
- Similar traffic conditions so one month isn't boosted by an event
- A short test window so too many other things don't change
- One major change at a time so you know what caused the result
If you change the price, rewrite all the product photos, and start a giveaway on the same day, you won't know what really moved demand.
Smart Pricing Experiments for Your Shopstar Store
Once you understand price elasticity, you can start using it like a practical tool. Not with giant price swings. Not by changing everything at once. Just with small, controlled tests.
South African ecommerce has become more competitive as the market shifted from a near-duopoly to a more fragmented space, which has intensified price competition and made value-added differentiation more important (South Africa ecommerce market analysis). For a small brand, that means price matters, but so do trust, presentation, speed, packaging, and story.
Start with one product, not your whole catalogue
Pick one item that sells often enough to give you some signal. A bestseller is usually easier than a slow mover.
Good candidates include:
- A hero product like your signature soy candle or best-selling hoop earrings
- A repeat purchase item such as coffee beans, rusks, or beard oil
- A comparison-heavy item where buyers likely check alternatives
- A bundle candidate that can be packaged with another item
If you want to run a discount test neatly, this walkthrough on how to create a voucher rand value or discount is handy for setting it up without confusion.
Here's a useful explainer before you test anything:
Five low-risk tests you can run
-
Try a short sale
Run a brief discount on one product. Watch units sold, average order value, and whether new customers appear. Keep notes. Don't rely on memory. -
Test a bundle instead of a discount
Pair a candle with matches, or a bracelet with gift packaging. Sometimes buyers respond better to added value than to a lower sticker price. -
Offer a voucher to a small group
Share a code with your email list or Instagram followers only. That lets you test price sensitivity without changing your public pricing for everyone. -
Change the product page, not only the price
Improve the photos, tighten the description, add clearer sizing or scent notes, and then watch what happens. If sales improve without a discount, your demand may be less price-sensitive than you thought. -
Compare audience segments
A promotion sent to returning customers may behave differently from one aimed at first-time browsers. The same product can look elastic in one group and firmer in another.
Small tests beat big guesses. You learn faster, and the risk stays manageable.
A maker selling handmade jewellery might discover that a discount barely changes sales, but gift-ready packaging lifts conversions. A baker selling rusks might find the opposite. That's why experiments matter. Your store teaches you what your market values.
Your Next Steps in Smart Pricing
Price elasticity isn't a theory to admire from a distance. It's a listening tool.
When you change a price and watch what buyers do, you learn something real about your store. You learn whether shoppers compare heavily, whether your brand carries trust, whether bundles help, and whether discounts move demand or just reduce margin.
That matters for a new South African online store because you're usually making decisions with limited time, limited stock, and a tight budget. You don't need perfect precision. You need a better next decision.
A good next move is small:
- Pick one product
- Review its recent sales
- Run one modest pricing test
- Write down what changed
- Keep what worked
If you want to see how pricing logic becomes more dynamic in bigger ecommerce environments, Headline's guide to Amazon pricing is worth a read. You don't need to copy Amazon. But it can help you think more clearly about when to stay steady and when to test.
Keep it simple. Don't overhaul your whole catalogue this week. Learn from one product first. That's how smart pricing starts.
If you're ready to test your pricing with a store built for South African makers and creators, have a look at Shopstar. It gives you a simple way to launch your online shop, manage products, track orders, and run the kind of small pricing experiments that help you learn what your customers will pay.
