About the Price Elasticity Calculator
This price elasticity calculator measures how sensitive customers are to a price change. Enter the old and new price and the quantity sold at each, and it returns the price elasticity of demand using the midpoint (arc) formula, classifies demand as elastic, inelastic or unit elastic, and shows how total revenue changed.
Pricing managers, e-commerce sellers, SaaS founders and economics students use it to judge price tests and promotions. If demand is elastic (|E| > 1), a price rise loses more volume than it gains in price and revenue falls; if it is inelastic (|E| < 1), revenue rises with price.
The midpoint method uses the average of the two prices and the two quantities as the base, so you get the same answer whether the price rose or fell. Elasticity from real sales data also reflects anything else that changed at the same time — seasonality, competitor moves or marketing — so compare periods that are otherwise similar.
With the default inputs, the price elasticity of demand is -1.11. Change any value above to recalculate instantly.
How to use the price elasticity calculator
- 1Enter the original price and the quantity sold at that price.
- 2Enter the new price and the quantity sold after the change.
- 3Read the elasticity and whether demand is elastic or inelastic.
- 4Check the revenue change to see whether the price move paid off.
Formula and method
Price elasticity of demand is the percentage change in quantity divided by the percentage change in price. The midpoint (arc) method measures each percentage change against the average of the old and new values, so the result is the same whether you move from P₁ to P₂ or back again.
Demand elasticity is normally negative because quantity falls when price rises. Economists usually compare its absolute value to 1: above 1 is elastic, below 1 is inelastic, and exactly 1 is unit elastic, where revenue does not change. Revenue is simply price × quantity at each point.
- P₁, P₂
- Original and new price
- Q₁, Q₂
- Quantity sold at each price
- E
- Price elasticity of demand
Worked examples
10% price rise on a $20 product
Using midpoints, price rose 2 ÷ 21 = 9.52% and quantity fell 100 ÷ 950 = 10.53%, so elasticity is −1.11. Demand is elastic: revenue slipped from $20,000 to $19,800.
Coffee price rise from $3.00 to $3.50
Price rose 15.38% on a midpoint basis while cups sold fell only 5.13%, giving an elasticity of −0.33. Demand is inelastic, so revenue grew from $30,000 to $33,250.
Sale price from $50 to $40
A $10 cut is −22.22% at the midpoint and units rose 40%, so elasticity is −1.8. Because demand is elastic, the discount lifted revenue from $10,000 to $12,000.
Frequently asked questions
What is the midpoint formula for price elasticity?+
Elasticity = (change in quantity ÷ average quantity) ÷ (change in price ÷ average price). Using averages as the base gives the same result for a price rise or a price cut between the same two points.
What does an elasticity of −2 mean?+
It means a 1% change in price causes about a 2% change in quantity in the opposite direction. Demand is elastic, so raising prices would reduce total revenue and cutting them would increase it.
What makes demand elastic or inelastic?+
Demand is more elastic when there are close substitutes, the purchase is a large share of income, or buyers can easily delay. Necessities, habits and products without alternatives tend to be inelastic.
Why is price elasticity negative?+
For most goods, quantity demanded falls when price rises (the law of demand), so the two percentage changes have opposite signs. Many textbooks quote the absolute value instead.
Does elasticity tell me the profit-maximising price?+
Not by itself. Elasticity shows the revenue effect; profit also depends on unit costs. Selling fewer units at a higher price can raise profit even when revenue falls slightly.