Price Elasticity Calculator

Measure how sensitive demand is to price and whether a price change raises or lowers revenue.

About Price Elasticity Calculator

The midpoint (arc) method divides each change by the average of the two values rather than the starting one, which makes the elasticity identical whether you raise or lower the price. Absolute elasticity above one means demand is elastic and a price rise cuts revenue. Elasticity decides whether the right move is to raise price or cut it, and getting the sign and magnitude wrong is an expensive mistake at scale.

Formula

Price Elasticity

Elasticity = % change in quantity ÷ % change in price, using midpoint percentages

elastic: Absolute elasticity above 1, where demand responds more than proportionally
midpoint method: Percentages taken against the average of the two values, so the result is symmetric

Worked example

With the default values below, Price Elasticity Calculator returns Price Elasticity of Demand of -1.340. Change any input above and every figure here is recalculated in your browser.

Inputs used

Original priceminimum 0.01: 100
New priceminimum 0.01: 110
Units sold at the original priceminimum 0.01: 1,000
Units sold at the new priceminimum 0: 880

Results

Price Elasticity of Demand: -1.340
Demand Type: Elastic — a price rise reduces total revenue
Revenue Before: $100,000.00
Revenue After: $96,800.00
Change in Revenue: -3.20%

Step by step

1Values used
2Price Elasticity
3Price Elasticity of Demand= -1.340
4Demand Type= Elastic — a price rise reduces total revenue
5Revenue Before= 100,000.00
6Revenue After= 96,800.00
7Change in Revenue= -3.20

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, fees or charges or compounding frequency into account.
Figures are rounded for display to 3 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

How is Price Elasticity calculated?

Elasticity = % change in quantity ÷ % change in price, using midpoint percentages The midpoint (arc) method divides each change by the average of the two values rather than the starting one, which makes the elasticity identical whether you raise or lower the price. Absolute elasticity above one means demand is elastic and a price rise cuts revenue.

Why does Price Elasticity matter?

Elasticity decides whether the right move is to raise price or cut it, and getting the sign and magnitude wrong is an expensive mistake at scale.

What values do I need to enter?

This calculator takes 4 inputs: Original price, New price, Units sold at the original price, Units sold at the new price. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.