Price Elasticity Calculator
Calculate price elasticity of demand. See if demand is elastic or inelastic and optimize pricing.
By Konstantin Iakovlev · Updated April 2026 · Source: SBA — Business Guide
Price Elasticity
2.00
Type
Elastic
Revenue Change
+$4,000.00
Elasticity Analysis
| Price Elasticity of Demand | 2.000 |
| Type | Elastic |
| 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
Whether you sell software subscriptions or physical goods, the question of how buyers react when you move a price is central to pricing strategy. This calculator measures that sensitivity directly, so you can locate the price points that hold demand and protect, or even lift, your 2026 revenue.
The math here follows the Midpoint Method for price elasticity of demand (PED). Its formula is ((Q2 - Q1) / ((Q2 + Q1) / 2)) / ((P2 - P1) / ((P2 + P1) / 2)), where Q1 and P1 are the starting quantity and price and Q2 and P2 are the new quantity and price. Averaging the start and end values keeps the result symmetric no matter which direction the price moves.
Results are only as trustworthy as the data behind them, and the analysis window deserves particular attention. Squeeze the period too tight and you may miss the full demand response to a price change. Leaving out external forces, competitor moves, seasonal swings, and the like, can also push the elasticity figure away from what the market is really doing.
Example: Premium Coffee Beans
- 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 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 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 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?
Is food elastic or inelastic?
How do you use price elasticity to set prices?
You might also need
Self-Employment Tax Calculator 2026 — SE Tax & Quarterly Payments
Calculate SE tax, quarterly estimated payments, and total tax burden for freelancers and 1099 contractors. Free, instant results based on 2026 IRS rates.
LLC vs S-Corp Tax Comparison Calculator
Compare tax liability as an LLC vs S-Corp. See how much you can save on self-employment tax with an S-Corp election.
W-2 vs 1099 Comparison Calculator
Compare take-home pay as a W-2 employee vs 1099 contractor. Find the equivalent 1099 rate to match your W-2 salary.