Price Elasticity Calculator
Calculate arc price elasticity of demand, see whether demand is elastic or inelastic and what it means for revenue.
Quick answer
Price elasticity of demand = percentage change in quantity / percentage change in price, using the midpoint method: change divided by the average of old and new values. Above 1 in size is elastic.
Price Elasticity Calculator
Leave blank to skip the forecast. It starts from the new price and quantity.
Price Elasticity
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% Change in Price
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% Change in Quantity
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Old Revenue
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New Revenue
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Forecast Quantity at Test Price
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Forecast Revenue at Test Price
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Working
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Assumptions & method
- Midpoint % change in quantity = (Q2 − Q1) ÷ ((Q1 + Q2) ÷ 2). Midpoint % change in price = (P2 − P1) ÷ ((P1 + P2) ÷ 2).
- Elasticity = % change in quantity ÷ % change in price. Absolute value above 1 is elastic, below 1 is inelastic, and about 1 is unit elastic.
- Revenue = price × quantity, before and after the change.
- Forecast: with k = elasticity × midpoint % change in price from the new price to the test price, quantity = Q2 × (1 + k ÷ 2) ÷ (1 − k ÷ 2).
- The forecast assumes the same elasticity holds at the test price and everything else stays equal. Costs and profit are not included.
Results are estimates based on the figures you enter. They are not guarantees and not financial advice.
Reading price elasticity
Price elasticity of demand shows how strongly customers react to a price change. This calculator uses the midpoint method: the change in quantity as a percentage of the average quantity, divided by the change in price as a percentage of the average price. A result of minus 2, for example, means a 1% price increase is associated with about a 2% fall in quantity. If demand is elastic, raising the price lowers revenue. If it is inelastic, raising the price increases revenue. You can also use the result to estimate demand at another price.