My college macro economics professor used to explain the Elasticity of Demand as a rubber band with one end attached to a particular product and the other end attached to its price. As the price rises, the demand (represented by the rubber band) stretches to the point that the consumer is willing to pay, until the price becomes too high for the consumer and the rubber band breaks. So, when Pepsi prices rise to a certain point, more people start to buy Coke, etc.
With this philosophy in mind, I've been taking note of my own photography business' elasticity and have found some interesting things:
1. By the end of 2007, we will have done three separate shoots in the state of California. Is this because there are no photographers in California? It's very expensive for a client to fly me, my equipment and assistant out to a location while paying for hotel, rental car and meals for a week or more. My guess is these clients (who I have worked with previously) appreciate our images and the easy process of working with us. For these two clients, our services are highly elastic relative to the cost of working with us.
2. Back in 2004, we spent six weeks shooting resorts in Hong Kong and Bali while flying from our base in Florida. In this case, our services were extremely elastic.
3. While we seem to be good enough for resorts around the globe, we apparently don't have much clout here at home. For instance the Boca Raton Resort & Club—long considered a playground for the wealthy—is so geographically close that I can actually see that pink tower from just outside my house. However, when I offered them a quotation to shoot their property, they quickly hung up the phone and never called back. I guess they consider my work completely inelastic.
My college professor would be so proud.