keisoku

Price Elasticity of Demand Calculator

Enter the price and quantity demanded before and after a change to instantly compute the price elasticity of demand, with elastic vs. inelastic judgement and midpoint (arc) elasticity support.

Input

Calculation method

Before

$
units

After

$
units

Result

Price elasticity of demand (absolute value)

1.00

Unit elastic (|E| = 1)

Price and demand change by the same proportion, so revenue stays roughly constant whether you raise or lower the price.

Price change rate

20.0 %

Quantity change rate

-20.0 %

Elasticity (signed)

1.00

How it works

  • Price elasticity of demand is found as '−(percentage change in quantity demanded) ÷ (percentage change in price)'. Raising the price normally lowers demand, so the raw result is negative, but the absolute value is shown as the main figure for easier comparison.
  • Just enter the four values — price and quantity demanded before and after — and the tool automatically computes each percentage change and the elasticity. Price is the unit price and quantity is typically the units sold.
  • An absolute value above 1 is judged 'elastic' (demand is sensitive to price), below 1 is 'inelastic' (demand barely moves when the price changes), and exactly 1 is 'unit elastic'. Necessities tend to be inelastic, while luxuries and goods with many substitutes tend to be elastic.
  • Choosing the 'midpoint (arc) method' computes the percentage changes relative to the average of the before and after values. Because it gives the same result regardless of which point you treat as the start, it is handy when you want to avoid elasticity differing between a price increase and decrease.
  • Elasticity guides pricing strategy: an elastic good can gain revenue from a price cut, while an inelastic good can gain revenue from a price increase. Enter your actual before/after sales figures to gauge how strongly demand responds.
  • These results are approximations based on the change between two points. Actual demand depends on many factors such as income, season, competition, and advertising, so use the figures as a rough guide.