Price Elasticity of Demand Calculator
Calculate price elasticity of demand with the midpoint method to quantify how sensitive quantity is to price changes.
Elasticity outcomes depend on clean test design and stable market conditions; validate results before changing pricing strategy.
Examples
- Initial price $20.00, new price $24.00, initial quantity 1,000, new quantity 820 ⇒ Price elasticity of demand (midpoint): -1.09 (elastic). Quantity change -19.78%, price change 18.18%.
- Initial price $50.00, new price $45.00, initial quantity 400, new quantity 430 ⇒ Price elasticity of demand (midpoint): -0.69 (inelastic). Quantity change 7.23%, price change -10.53%.
FAQ
Why does elasticity usually show a negative sign?
Because higher prices typically reduce demand, the percent changes move in opposite directions, resulting in a negative elasticity value.
What if elasticity is greater than 1 in absolute value?
Demand is elastic, meaning quantity responds more than proportionally to price changes.
Can I use revenue instead of quantity?
Elasticity is defined on quantity, not revenue. Use unit sales, subscriptions, or another direct demand measure.
Additional Information
- All inputs should reflect the same time window and market segment to avoid mixing seasonal effects.
- The midpoint method reduces bias when price moves up versus down, making it suitable for A/B pricing tests.
- Elasticity is unitless; negative values reflect inverse price-demand relationships.