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
- — 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%).
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
What does elastic vs. inelastic mean?
What products have high price elasticity?
Should I raise or lower my price?
How is price elasticity used by businesses?
What is income elasticity of demand?
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.