Enter a price change and how sales responded. The calculator returns the elasticity coefficient with the midpoint (arc) or simple method, classifies demand as elastic, inelastic or unit elastic, and shows what happened to total revenue.
Last updated:
Price
$
$
Quantity demanded
Units sold per period at the initial price
Units sold per period at the new price
Method
The midpoint method gives the same answer whether price rises or falls.
Enter your values to see the result.
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How to use the Price Elasticity of Demand Calculator
Enter the initial and new price of the product.
Enter the quantity sold at each price over the same period.
Pick a method: midpoint (recommended) or simple percentage change.
Press Calculate elasticity to see the coefficient, the classification and the revenue change.
Check the what-if table for a rough view of other price moves.
Price elasticity of demand formulas
Price elasticity of demand (PED) measures how strongly the quantity people buy responds to a change in price:
Example: the price rises from $10 to $12 and sales fall from 1,000 to 850 units. Midpoint: %ΔQ = −150 ÷ 925 = −16.22%, %ΔP = 2 ÷ 11 = 18.18%, so E = −0.892 (inelastic). Revenue rises from $10,000 to $10,200 because the price increase outweighs the lost volume.
Because demand curves slope downward, E is normally negative. Economists often quote the absolute value, so "an elasticity of 0.89" and "−0.89" describe the same thing.
How to read the result
|E|
Classification
If you raise the price, revenue…
If you cut the price, revenue…
0
Perfectly inelastic
rises in proportion
falls in proportion
Between 0 and 1
Inelastic
rises
falls
1
Unit elastic
stays the same
stays the same
Greater than 1
Elastic
falls
rises
Infinite
Perfectly elastic
drops to zero
captures the whole market
Goods with few substitutes, necessities and items that are a small share of the budget tend to be inelastic. Goods with close substitutes, luxuries and purchases that can be postponed tend to be elastic, and demand usually becomes more elastic over longer time periods as buyers adjust.
Frequently asked questions
What is price elasticity of demand?
It is the percentage change in quantity demanded divided by the percentage change in price. An elasticity of −2 means a 1% price increase reduces the quantity bought by about 2%.
Why use the midpoint method?
The simple method uses the starting value as the base, so a rise from $10 to $12 and a fall from $12 to $10 give different answers. The midpoint (arc) method divides by the average of the two values, so the result is the same in both directions.
Why is my elasticity negative?
Price and quantity demanded usually move in opposite directions, so the ratio is negative. Elasticity is often reported as an absolute value; only the size matters for the elastic or inelastic classification.
What does elastic vs inelastic mean?
If |E| is greater than 1, demand is elastic: quantity reacts more than price, so raising the price lowers revenue. If |E| is less than 1, demand is inelastic and a price increase raises revenue. At exactly 1 (unit elastic) revenue does not change.
How does elasticity relate to total revenue?
Revenue is price times quantity. With inelastic demand, price and revenue move in the same direction; with elastic demand they move in opposite directions. This calculator shows revenue before and after so you can see it directly.
Can I use this for a real pricing decision?
It measures what happened between two observations. Other factors such as seasons, competitor prices or promotions also change sales, so compare periods that are otherwise similar and treat the result as an estimate.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.