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Price Elasticity Calculator

Calculate how sensitive your customers are to price changes.

Calculator

The price before the change.
$
The price after the change.
$
Number of units sold at the original price.
units
Number of units sold at the new price.
units
PRICE ELASTICITY
2.00
Highly Elastic

Customers are very sensitive to price. Small increases will significantly hurt volume.

Formula

Elasticity = |% Change in Quantity ÷ % Change in Price|

Worked example

Price change = 20%. Quantity change = -10%. Elasticity = |-10% ÷ 20%| = 0.5. (Inelastic)

Original Price
100
New Price
120
Original Quantity Sold
1000
New Quantity Sold
900

Industry benchmarks

Highly Elastic

Customers are very sensitive to price. Small increases will significantly hurt volume.

Unitary

Revenue stays roughly the same after a price change.

Inelastic

Customers are not sensitive to price. You can likely raise prices without losing much volume.

FAQ & key takeaways

How to read this metric

What it measures

Price Elasticity of Demand measures how the quantity demanded of a good or service changes in response to a change in its price. It helps you understand if your product is a necessity or a luxury in the eyes of your customers.

Why it matters

If your product is “inelastic” (score < 1), you can increase prices and grow your total revenue because the drop in volume will be small. If it is “elastic” (score > 1), increasing prices will hurt your revenue as customers switch to competitors or stop buying.

How to reduce elasticity

  1. Brand Building: Strong brands create loyalty that makes customers less sensitive to price changes.
  2. Product Differentiation: Make your product unique so that there are no easy substitutes.
  3. Increase Switching Costs: Make it difficult or inconvenient for customers to switch to a competitor.
  4. Value-Added Services: Bundle your product with services that increase its overall value and utility.