Price Elasticity Calculator
Enter an old and new price alongside the quantity sold at each, and see the price elasticity of demand with a plain-English reading.
Advertisement
About this tool
Price elasticity of demand measures how much the quantity sold of a product responds to a change in its price. It's calculated as the percentage change in quantity divided by the percentage change in price. A result greater than 1 (ignoring the sign) means demand is "elastic" — customers are quite sensitive to the price change. A result less than 1 means demand is "inelastic" — sales barely move even as the price changes, which is common for essentials with few substitutes.
- Why is the elasticity figure usually negative?
- Because price and quantity typically move in opposite directions — raise the price and quantity sold usually falls, giving a negative ratio. The sign shows direction; the size (ignoring the sign) shows how sensitive demand is.
- What counts as "elastic" versus "inelastic"?
- An absolute value greater than 1 is elastic (demand is sensitive to price), less than 1 is inelastic (demand barely responds), and exactly 1 is "unit elastic" (demand changes in the same proportion as price).
- Can I use this for a price decrease too?
- Yes — enter the lower price as the "new" price and a higher expected or observed quantity as the new quantity; the formula works the same way regardless of direction.