What is Price Erosion?
Definition: Price erosion is the decline in the average selling price of products over a specified period.
Context: This metric uncovers the long-term price trend underlying month-by-month ASP movements and is crucial for understanding price dynamics and the devaluation of brands and products over time. It provides insight into how product values decrease, reflecting broader market and economic forces that can influence pricing strategies and brand positioning.
Example: A price erosion of -4% from January to March suggests that prices fell by an average of 2% each month.
A price erosion of -4% from January to March suggests that prices fell by an average of 2% each month, indicating a continuous downward trend in product pricing within this period. Analysing this pattern can help businesses adjust their pricing strategies to better align with market conditions and consumer expectations.
