Price Elasticity of Demand Calculator
(Midpoint Method)
Enter the price and quantity sold before and after a price change. The calculator gives the elasticity by the midpoint method and the effect on revenue.
Step 1 — Price Points
Step 2 — Quantity Demanded at Each Price
Calculated Results
Enter two different price points and their corresponding quantities sold to calculate elasticity.
This price elasticity of demand calculator measures how strongly sales respond to a price change. Enter the price and the quantity sold before and after the change. It calculates the elasticity with the midpoint method, labels demand as elastic or inelastic, and shows revenue before and after.
The Price Elasticity of Demand Formula
Price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price. The midpoint method measures each percentage against the average of the two values.
A shop raises a price from $10 to $12 and weekly sales fall from 500 to 380 units.
| Step | Calculation | Result |
|---|---|---|
| % change in price | (12 − 10) ÷ 11 × 100 | 18.18% |
| % change in quantity | (380 − 500) ÷ 440 × 100 | −27.27% |
| Elasticity | −27.27 ÷ 18.18 | −1.50 |
These formulas follow the OpenStax textbook Principles of Economics, 3rd edition.
Why Use the Midpoint Method
With ordinary percentage change, the answer depends on the direction. From $10 to $12 is a 20% rise. From $12 back to $10 is a 16.7% cut. The same two points would give two different elasticities. Dividing by the average, $11, gives 18.18% both ways, so the elasticity between two points is one number.
Elastic, Inelastic and Unit Elastic
Elasticity of demand is normally negative, because quantity falls when price rises. It is read as an absolute value.
| Absolute value | Demand is | A price rise makes revenue |
|---|---|---|
| Greater than 1 | Elastic | Fall |
| Equal to 1 | Unit elastic | Stay the same |
| Less than 1 | Inelastic | Rise |
Real data almost never lands on exactly 1, so the calculator labels values from 0.95 to 1.05 as unit elastic.
Elasticity and Revenue
The same $10 to $12 price rise with two different responses:
| Sales after the rise | Elasticity | Revenue before | Revenue after | Change |
|---|---|---|---|---|
| 380 units | −1.50 (elastic) | $5,000 | $4,560 | −$440 |
| 460 units | −0.46 (inelastic) | $5,000 | $5,520 | +$520 |
Revenue is not profit. If each unit costs $4 to supply, profit in the elastic case goes from 500 × $6 = $3,000 to 380 × $8 = $3,040. Revenue fell and profit rose slightly, because fewer units had to be supplied. Check margin as well as revenue with the Gross Profit Margin Calculator.
Limits of a Two-Point Estimate
- Other changes: the figure assumes price was the only thing that changed. A season, a promotion or a competitor's move in the same weeks will distort it.
- Equal periods: compare quantities over periods of the same length, such as four weeks before and four weeks after.
- One range only: the result describes demand between these two prices. A further rise may get a different response.
- Small numbers: with low sales, a few orders more or less move the result a long way.
How to Use the Price Elasticity Calculator
- Enter the two prices: Type the original price and the new price.
- Enter the two quantities: Type the quantity sold at the original price and at the new price, over periods of the same length.
- Read the elasticity: The calculator shows the elasticity and labels demand as elastic, inelastic or unit elastic.
- Check revenue: Compare revenue before and after to see what the price change did to sales income.
Frequently Asked Questions
How do I calculate price elasticity of demand?
Divide the percentage change in quantity demanded by the percentage change in price. With the midpoint method, each percentage is the change divided by the average of the two values. A price rise from $10 to $12 that cuts sales from 500 to 380 gives −27.27% ÷ 18.18% = −1.5.
What is the midpoint method?
A way of calculating percentage change that divides by the average of the start and end values and not by the start value. It gives the same elasticity whether the price went up or came down between the same two points.
What does an elasticity of −1.5 mean?
A 1% rise in price goes with a 1.5% fall in the quantity sold. The number is greater than 1 in absolute value, so demand is elastic and raising the price lowers revenue.
What is the difference between elastic and inelastic demand?
Demand is elastic when the elasticity is greater than 1 in absolute value: quantity changes by a larger percentage than price. It is inelastic when the value is less than 1: quantity changes by a smaller percentage than price. At exactly 1 it is unit elastic.
Why is price elasticity of demand negative?
Price and quantity demanded normally move in opposite directions, so one change is positive and the other negative. Economists usually read the figure as an absolute value and leave off the minus sign.
Does elastic demand mean I should not raise prices?
Not always. Elasticity tells you what happens to revenue. Profit also depends on cost: selling fewer units costs less to supply, so a price rise can lower revenue and still raise profit.
The definition, the midpoint formulas and the elastic and inelastic thresholds were checked against OpenStax Principles of Economics 3e, section 5.1, in October 2026.