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Optimal Price Point Calculator

Work out optimal price point instantly with clear inputs, formula shown and shareable results.

About Optimal Price Point Calculator

For constant-elasticity demand the contribution-maximising price is the Lerner rule: price equals variable cost multiplied by E/(E-1), where E is the absolute elasticity. Volume is then projected with the constant-elasticity curve so you can see the profit trade-off rather than just the price.

Formulas

Optimal price (Lerner)

P* = Variable cost x E / (E - 1), for E > 1

Projected volume

Q* = Q0 x (P*/P0)^-E

Worked example

With the default values below, Optimal Price Point Calculator returns Profit-maximising price of $40.33. Change any input above and every figure here is recalculated in your browser.

Inputs used

Current price
40
Current volume
5,000
Variable cost per unit
22
Price elasticity (absolute value)
2.2

Results

Profit-maximising price
$40.33
Projected volume at that price
4,910
Projected contribution
$90,008.26
Change vs current price
$8.26

Step by step

  1. 1Values used
  2. 2Optimal price (Lerner)
  3. 3Projected volume
  4. 4Profit-maximising price= 40.33
  5. 5Projected volume at that price= 4,910
  6. 6Projected contribution= 90,008.26
  7. 7Change vs current price= 8.26

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or compounding frequency into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

What if elasticity is 1 or less?

There is no interior optimum — the model says raise price indefinitely. In reality a competitive ceiling or a value cap binds first, so treat low elasticity estimates with caution.

Does this cover fixed costs?

No. Fixed costs do not change the optimal price; they only determine whether the resulting contribution is enough to be viable.

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