I have few product categories eg prod1 prod2. Each category have similar products. So prod1 has 3 similar products with slight difference in features and prod2 has 5 products with slight differences. Now we have decided to reduce price for each of this product for regulation purpose. So we want see if decreasing the price will have impact on volume increase. Problem is we have different price structure in place. Regular price and volume based price. So for customers who generates huge volumes we give them discounts based upon slabs eg if volume is between 1000 to 20000 then \$10, if 20000 to 30000 then \$5. And all customers below 1000 volume is priced the regular price $30. Now how to implement elasticity model here. Since lower prices were given to customers with already high volume. If I run a regression will it not have cyclical impact since low prices were given to customer with higher volume. My question is how do I structure the data for regression
- Should I separate customers based upon volume slabs and pricing structure that is regular vs discounted price?
- for each customer should I consider volume data for months before price decrease and then volume after price increase.
- Should I create 1 model for each product category or sub category. I am new to this. Most of the examples online are more straightforward. Any help is appreciated