#07 - What is Interaction Elasticity?

How does elasticity interact with economy?

What is elasticity? How does it relate to usability?

Elasticity is an economic term, which measures the degree to which consumers respond to a change in price. What would happen if a famous brand raised its price? Consumers may be highly in love with the brand and therefore their demand may not decrease, "who cares if it's worth it" (if you think about the NPS, it would be the promoters' analogy); here we would be talking about the fact that their price compared to their demand is inelastic, in other words, it doesn't suffer or it suffers such a minimal variation that you can play with this value.

An example would be: I have a pricing of 9€/month with 400 active users, and if I go up to 11€/month the subscription, 20 fall. The curve would be inelastic, it suffers only a small amount.

And the other way around? What happens if we raise the pricing and we lose a lot of users? Using the example above, imagine that we go from a pricing of 9€/month with 400 users to a pricing of 11€/month with 190 users, we would be presented with an elastic curve.

We could say that an elastic curve has many competitors, and that these users could look for other products with the same features, a lower price to the new one, better customer service, or a better user experience, while if the curve is inelastic, the brand is in a niche, has unique features, a very powerful brand, or a very high degree of usability.

Elasticity of web interaction

‍What does this have to do with interaction? Well, according to Nielsen (2008), all the parameters that contribute to an improvement in the use of a digital product, reduce the elasticity of the interaction. All the principles of usability, interaction, response time, break this curve, creating a greater commitment to the product, more users will use it, more pages will visit per session and more will convert as a result.

So if all these variables reduce the interaction elasticity, we could reduce the interaction cost and play with this improvement margin to increase the pricing. Improving interaction is an important investment.

But on the other hand, if our curve is elastic, and we sacrifice usability, the curve will be even more elastic, damaging our product in terms of design, usage and revenue.

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