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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

  1. Run a 15% price increase to $126 for 4-8 weeks on one segment or region, holding marketing constant.
  2. Set the kill switch in advance: reverse the test if volume moves more than 21.6% against you.
  3. Recompute elasticity with the new data point; elasticity usually changes as you move further from today's price.
  4. 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.

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