Price elasticity of demand tells you whether raising your price will increase or decrease total revenue. When demand is inelastic (elasticity between -1 and 0), price increases boost revenue. When demand is elastic (elasticity below -1), price cuts grow revenue. This calculator shows the revenue impact across a range of price scenarios.
Pricing Inputs
Negative value. -1.5 means 10% price rise → 15% unit drop
Price Scenario Analysis
| Price | Units/Month | Revenue | Gross Profit | vs Current |
|---|
How to Use the Price Elasticity Calculator
Price elasticity quantifies the relationship between your price and the number of units customers buy. This calculator helps you model how different prices affect revenue and profit before you make the change.
Step 1: Enter Current Pricing and Volume
Enter your current price, monthly units sold, and unit cost (cost of goods sold or variable cost per unit). These establish your baseline revenue and profit to compare scenarios against.
Step 2: Estimate Your Elasticity
If you've run a price test, calculate elasticity as (% change in units) / (% change in price). If not, use category benchmarks: software/SaaS tends to be -0.5 to -1.5; consumer packaged goods -1 to -2.5; luxury goods -0.3 to -0.8; commodities -3 to -5. Start with -1.5 as a neutral starting point for most products.
Step 3: Read the Scenario Table
The table shows revenue and profit across a range of price points. The profit-maximizing price is highlighted — this is usually higher than your current price if your demand is inelastic. Compare the "vs Current" column to quickly see which price changes improve profitability.
FAQ
Is this price elasticity calculator free?
Yes, completely free with no signup required. All calculations run in your browser.
What is price elasticity of demand?
Price elasticity of demand (PED) measures how sensitive demand is to price changes. PED = (% change in quantity demanded) / (% change in price). A PED of -2 means a 10% price increase causes a 20% drop in sales. Values between -1 and 0 are inelastic (demand doesn't change much); below -1 are elastic (demand is highly sensitive to price).
When should I raise my price?
Raise prices when demand is inelastic (PED between -1 and 0). If demand barely changes with price increases, revenue goes up. Premium products, necessities, and goods with few substitutes tend to be inelastic. Luxury discretionary products, commodities with many substitutes, and price-sensitive markets are elastic.
What is elastic vs inelastic demand?
Elastic demand (|PED| > 1): A 10% price increase causes more than 10% drop in units — total revenue falls. Inelastic demand (|PED| < 1): A 10% price increase causes less than 10% drop in units — total revenue rises. Unit elastic (|PED| = 1): Percentage changes are equal — revenue is unchanged. Revenue is maximized where |PED| = 1.
How do I estimate my product's elasticity?
Run a price test: change price by 10–20% for a defined time period (or to a segment) and measure the change in units sold. Calculate PED as: (% change in units) / (% change in price). If you raised price 15% and saw units drop 9%, your PED is -0.6 (inelastic — good news, raising price increased revenue). If you raised price 15% and units dropped 25%, PED is -1.67 (elastic — the price hike hurt revenue).