Price Elasticity of Demand Calculator
Calculate the price elasticity of demand to understand how price changes affect sales volume. Know when raising prices increases revenue and when it decreases it — the key to optimal pricing.
📊 Pricing Science💼 Elasticity = % Change in Quantity / % Change in Price
Current price ($)
New price ($)
Current demand (units)
New demand (units)
Please enter valid values.
Formula & Reference
| Variable | Formula | Units |
|---|---|---|
| Price Elasticity of Demand Calculator | Elasticity = % Change in Quantity / % Change in Price | dimensionless |
Step-by-Step Examples
Example 1
Inelastic Product
Price $100→$110, demand 1,000→950 units.
- Price +10%, Quantity -5%
- Elasticity = -5/10 = -0.5 (inelastic)
- Revenue: $100,000 → $104,500 (+$4,500)
- Raise price — it increases revenue!
✓ Elasticity -0.5 — raise price to increase revenue
Example 2
Elastic Product
Price $100→$110, demand 1,000→850.
- Price +10%, Quantity -15%
- Elasticity = -15/10 = -1.5 (elastic)
- Revenue: $100,000 → $93,500 (-$6,500)
- Price increase hurt revenue!
✓ Elasticity -1.5 — price increase reduces revenue
Example 3
Unit Elastic
Price $100→$110, demand 1,000→909.
- Elasticity ≈ -1
- Revenue stays roughly constant
- Optimal price point — neither raising nor lowering changes revenue
✓ Elasticity ≈1 — near revenue-neutral price change
Real-World Applications
Pricing Strategy
Determine whether your product can support price increases.
Market Research
Measure customer price sensitivity with A/B pricing tests.
Retail
Understand which products can bear promotional markdowns without revenue loss.
SaaS Pricing
Test price points across different segments to find revenue-optimal price.
Common Mistakes to Avoid
⚠️
Assuming all products are equally elastic
Necessities (insulin, utilities) are highly inelastic. Luxury and discretionary purchases are more elastic. Know your product category before pricing.
⚠️
Testing price changes without measuring demand response
Without tracking actual unit sales at each price point, you can't calculate real elasticity. Use A/B pricing experiments.
⚠️
Ignoring cross-price elasticity
Price changes in one product affect demand for related products (substitutes and complements). A competitor raising prices can increase your demand.
Frequently Asked Questions
What does elasticity mean? ▾
Price elasticity = % change in quantity / % change in price. If price rises 10% and demand falls 5%, elasticity = -0.5.
What is inelastic demand? ▾
Elasticity between -1 and 0. Demand doesn't change much with price — price increases raise total revenue. Common in necessities, branded products, and switching-cost-heavy B2B.
What is elastic demand? ▾
Elasticity below -1. Demand changes more than proportionally with price. Price increases reduce total revenue. Common in commodities and highly substitutable products.
How do I find my product's elasticity? ▾
Run A/B price tests, analyze historical price changes vs sales, or survey willingness-to-pay using Van Westendorp or conjoint analysis.
What is the revenue-maximizing price? ▾
The price where elasticity equals -1 (unit elastic). But profit-maximizing price is different — it also accounts for marginal cost.