Price Elasticity Calculator

Calculate price elasticity of demand. See if demand is elastic or inelastic and optimize pricing.
$
$

Price Elasticity

2.00

Type

Elastic

Revenue Change

+$4,000.00

Elasticity Analysis

Price Elasticity of Demand2.000
TypeElastic
Price Change-10.0%
Quantity Change+20.0%

Revenue Impact

Revenue at Original Price$50,000.00
Revenue at New Price$54,000.00
Revenue Change+$4,000.00
Revenue Change %+8.0%

Use the Price Elasticity Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

Our Price Elasticity Calculator helps you determine how sensitive customer demand is to price changes. Understanding this is crucial for optimizing your pricing strategy, whether you're selling software subscriptions or consumer goods, potentially boosting your 2026 revenue by identifying optimal price points.

This calculator uses the Midpoint Method for calculating price elasticity of demand (PED). The formula is: ((Q2 - Q1) / ((Q2 + Q1) / 2)) / ((P2 - P1) / ((P2 + P1) / 2)), where Q1 and P1 are initial quantity and price, and Q2 and P2 are new quantity and price.

Ensure your data inputs are accurate and represent a realistic time frame for analysis. A common mistake is using too short a period, which might not capture the full impact of a price change, or ignoring external factors like competitor pricing or seasonal demand shifts.

Example: Premium Coffee Beans

  1. 1 Enter your initial price and quantity demanded, then your new price and the resulting quantity demanded. For instance, if you initially sold 1,200 bags of premium coffee beans at $18.00 per bag, and after increasing the price to $20.00, sales dropped to 1,000 bags.
  2. 2 Input Initial Quantity (Q1): 1200, Initial Price (P1): 18.00, New Quantity (Q2): 1000, New Price (P2): 20.00. The calculator will then apply the Midpoint Method formula.
  3. 3 The calculated Price Elasticity of Demand (PED) is -1.82. Since the absolute value (1.82) is greater than 1, demand for your premium coffee beans is elastic.
  4. 4 An elasticity of -1.82 suggests that a 1% price increase leads to a 1.82% decrease in quantity demanded. This indicates that customers are quite sensitive to price changes for your coffee beans, so further price increases might significantly reduce your total revenue.

Source: SBA — Business Guide · Last updated: April 2026

Frequently Asked Questions

What does a price elasticity of -2 mean?
A price elasticity of -2 means demand is elastic: a 1% price increase causes a 2% drop in quantity demanded. Revenue falls when you raise prices on elastic goods.
Is food elastic or inelastic?
Basic staple foods like bread and rice are generally inelastic (elasticity between 0 and -1) because people need them regardless of price. Luxury foods and restaurant meals tend to be more elastic.
How do you use price elasticity to set prices?
If demand is inelastic (between 0 and -1), raising prices increases revenue. If demand is elastic (below -1), lowering prices increases revenue because the volume gain outweighs the per-unit loss.

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