Price Elasticity & Optimal Price Calculator
Turn two past price points into your price elasticity, the profit-maximizing price, and a safe next price test.
Example scenario—not a forecast or verified benchmark. Enable JavaScript to edit inputs, view charts, save locally and export your analysis.
Example inputs
- Earlier price
- 100
- Units sold per month at the earlier price
- 2,000
- Current price
- 110
- Units sold per month at the current price
- 1,733
- Variable cost per unit
- 50
- Largest price move you would test at once
- 15
Example results
Elasticity is -1.5 and the profit-maximizing price is about $150; testing $126 is worth about $42K a year in contribution.
- Price elasticity (arc)
- -1.5
- Profit-maximizing price
- $150
- Recommended next test price
- $127
- Annual contribution change at test price
- $41,892
- Current annual contribution
- $1,247,760
- Contribution margin at current price
- 54.5%
- Break-even volume change for the test
- -21.6%
What stands out
Your last price change added $48K a year in contribution
Moving from $100 to $110 changed volume -13.3% and contribution from $1.2M to $1.2M a year.
The model optimum ($150) is 36% above today
That is well outside the prices you have observed. Step toward it in 15% increments and re-measure elasticity at each step.
A 15% increase breaks even if volume falls less than 21.6%
Your curve predicts a 18.9% drop, which is the margin of safety for the test.
Next actions
- Run a 15% price increase to $126 for 4-8 weeks on one segment or region, holding marketing constant.
- Set the kill switch in advance: reverse the test if volume moves more than 21.6% against you.
- Recompute elasticity with the new data point; elasticity usually changes as you move further from today's price.
- Pair any increase with a visible value message (guarantee, speed, bundle) to reduce volume loss.
Model assumptions & limitations
- Elasticity uses the arc (midpoint) method from your two observations.
- Assumes a constant-elasticity demand curve passing through your current price and volume; accuracy drops further from observed prices.
- Assumes the volume change was caused by price, not seasonality, marketing, or competitor moves.
- Profit-maximizing price = unit cost × e / (1 + e), valid only when demand is elastic (e < -1). Fixed costs are ignored.