What is price elasticity of demand?
Price elasticity of demand (PED) measures how much quantity demanded changes when price changes. It equals the percentage change in quantity divided by the percentage change in price.
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Price Elasticity Calculator
A price elasticity calculator measures how strongly customer demand responds to a price change. Enter a price and quantity before and after the change, and this calculator uses the midpoint formula to find the price elasticity of demand (PED), classify it as elastic, inelastic, or unit elastic, and show what happened to revenue.
Before and after
Use comparable time periods for both quantities.
Your result
Enter prices and quantities
Fill in the four fields and select Calculate, or load the example to see a price increase that lowers revenue.
Formula explained
How to calculate price elasticity of demand
PED = % change in quantity ÷ % change in price. With the midpoint method, each percentage change uses the average of the old and new values as its base:
[(Q2 − Q1) ÷ ((Q1 + Q2) ÷ 2)] ÷ [(P2 − P1) ÷ ((P1 + P2) ÷ 2)]
Results with |PED| within 0.05 of 1.00 are treated as unit elastic.
Enter both prices
Add the original price and the new price for the same product, plan, or unit.
Enter both quantities
Add units sold, subscribers, or orders at each price over comparable time periods.
Calculate elasticity
The calculator divides the midpoint percentage change in quantity by the midpoint percentage change in price.
Review revenue impact
Compare original and new revenue and read whether demand is elastic, inelastic, or unit elastic.
Common questions
Price elasticity FAQ
What is the midpoint elasticity formula?
The midpoint formula divides each change by the average of the old and new values: ((Q2 - Q1) / ((Q1 + Q2) / 2)) / ((P2 - P1) / ((P1 + P2) / 2)). It gives the same answer whether price rises or falls.
What do elastic, inelastic, and unit elastic mean?
Demand is elastic when the absolute value is above 1, inelastic when it is below 1, and unit elastic when it is about 1. This calculator treats values within 0.05 of 1 as unit elastic.
How does elasticity affect revenue?
With elastic demand, raising price usually lowers revenue. With inelastic demand, raising price usually raises revenue. Near unit elasticity, revenue changes very little.
Why is price elasticity usually negative?
Buyers usually purchase less when price rises, so price and quantity move in opposite directions. Economists often compare the absolute value to classify demand.
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