What products have high price elasticity?

Airline tickets, hotel rooms, restaurant meals, clothing, electronics — all highly elastic. Consumers easily switch to alternatives or delay purchase. B2C markets are generally more elastic than B2B markets where switching costs are high.

Should I raise or lower my price?

If demand is inelastic (|PED| 1): lowering price increases revenue (more volume offsets lower margin). Unit elastic (PED = −1): revenue doesn't change with price. But also consider margin — higher volume may cut profits.

How is price elasticity used by businesses?

Airlines use dynamic pricing — charging more when demand is inelastic (last-minute business travelers). Grocery stores put elastic items on sale to drive traffic. Pharmaceutical companies price drugs inelastically. Tech companies price software subscriptions to maximize lifetime value.

What is income elasticity of demand?

Income elasticity measures how demand changes when consumer income changes. Normal goods (PED > 0): demand rises with income. Inferior goods (PED 1.

Price Elasticity Calculator — Demand Sensitivity to Price | KalkWise

By the KalkWise Editorial Team Reviewed for accuracy Updated June 2026

What is the price elasticity calculator — demand sensitivity to price?

In short

Price elasticity of demand = % change in quantity ÷ % change in price. If a 10% price increase reduces demand by 15%, elasticity = −1.5 (elastic). If demand falls only 5%, elasticity = −0.5 (inelastic). Elastic goods lose revenue from price increases.

Calculates price elasticity of demand from before/after price and quantity data, and shows whether demand is elastic or inelastic and the revenue impact.

How to use this calculator

1Enter the original price and quantity sold.
2Enter the new price and new quantity sold after the price change.

The formula

PED=ΔQ/QΔP/P

|PED| > 1 = elastic; |PED| < 1 = inelastic

PED = (ΔQ ÷ Q) ÷ (ΔP ÷ P); |PED| > 1 = elastic; |PED| < 1 = inelastic; |PED| = 1 = unit elastic

PED: — Price elasticity of demand
ΔQ: — % change in quantity
ΔP: — % change in price

Worked example

The scenario

Price raised from $10 to $11 (10%), quantity fell from 1,000 to 850 units (−15%).

gives

The result

Elasticity: −1.5 (elastic). Revenue before: $10,000. Revenue after: $9,350. Revenue change: −$650.

Common use cases

Determine if a price increase will grow or shrink revenue.
Evaluate competitive pricing strategy.
Model demand sensitivity for a new product launch price.
Compare elasticity across product lines to prioritize pricing decisions.

Limitations & assumptions

Elasticity changes at different price points — it's not constant across the demand curve.
Requires clean before/after data; confounding factors (seasonality, competition) complicate real measurement.
Cross-price elasticity (substitutes/complements) is not modeled.
Assumes all else is equal — in practice, marketing, quality, and competitor actions change simultaneously.

Frequently asked questions

Elastic (|PED| > 1): quantity changes more than proportionally to price — raising price loses revenue. Inelastic (|PED| < 1): quantity changes less — raising price gains revenue. Luxury goods, necessities like insulin, and utilities with no substitutes tend to be inelastic.

Disclaimer: KalkWise calculators are provided for general informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. Results are estimates based on the figures you enter and the assumptions described above. Actual outcomes will vary. Consult a qualified professional before making financial decisions.

Price & Demand