Price Elasticity Calculator

What this calculator does

It answers the question every price change asks: if I move the price by this percentage, by what percentage does quantity move, and what happens to revenue? Between two points it reports the midpoint elasticity as the headline, because the older starting-point formula gives a different answer for a rise than for the same fall reversed, and a measure that depends on which way you happened to travel is measuring the journey as well as the demand. The starting-point figure is still shown, labelled, so the difference is visible on your own numbers. In point mode the page evaluates your demand function at your price, takes its derivative, and applies the point formula, derivative x price / quantity. Both modes report the signed value (which carries direction: negative for ordinary demand, since price and quantity move against each other) and the absolute value (which carries strength), and classify the demand as elastic, inelastic, unit elastic or one of the perfect extremes.

How to use it

• Elastic means revenue follows quantity, inelastic means revenue follows price. If demand is elastic (absolute elasticity above 1), a price rise loses proportionally more quantity than it gains in price, and revenue falls; a price cut can pay. If inelastic (below 1), quantity barely answers, revenue moves with the price, and rises add revenue while cuts give it away. The revenue comparison on this page shows which regime your two points sat in, in dollars.
• Two points describe a stretch of road, not the map. Elasticity usually changes along a demand curve (a straight-line demand curve has a different elasticity at every point, elastic at the top, inelastic at the bottom). The midpoint figure is an average over the stretch between your two points; do not carry it to a price far outside that stretch and expect it to hold.
• Everything else must have stood still. The two observations only isolate the price effect if income, tastes, rival prices and the product itself were roughly unchanged between them. A quantity fall that coincided with a competitor’s promotion is not your elasticity, and no formula can launder it into one; this is the ceteris paribus warning, and it is the real limitation of every two-point estimate.
• Direction of travel matters for the story, not the midpoint number. The midpoint value is identical for the trip out and the trip back, by construction. The starting-point figure is not (on this page’s worked example it says -1.00 one way and -0.83 the other), which is why economists largely retired it for arc measurement while keeping it for quick estimates.
• The sign is information. Ordinary goods give negative elasticity. A positive result from real data is a flag, not a curiosity: it can mean a Giffen or status good, but far more often it means the two points were polluted by something else moving at the same time, and the classification rows help you see it.

How it is calculated

• Midpoint elasticity = ((Q2 – Q1) / ((Q1 + Q2) / 2)) / ((P2 – P1) / ((P1 + P2) / 2)). Both changes are measured against the average of their two values, which is what makes the result direction-proof.
• Starting-point elasticity = ((Q2 – Q1) / Q1) / ((P2 – P1) / P1), shown for comparison.
• Point elasticity = (dQ/dP) x (P / Q), with Q and the derivative taken from your function at your price: for Q = a – b x P the derivative is -b; for Q = a x P^b it is a x b x P^(b-1), and the elasticity simplifies to b itself.
• Classification (on the absolute value): above 1 elastic; below 1 inelastic; exactly 1 unit elastic; 0 perfectly inelastic (quantity did not move); the limit where price did not move but quantity did is perfectly elastic and has no finite value, which the results state rather than fake.
• Revenue = price x quantity at each point, with the change reported in dollars and percent.

Worked examples

An elastic stretch. Price rises from $10 to $12; quantity falls from 100 to 80. On the midpoint basis the price change is 2 / 11 = 18.18% and the quantity change is -20 / 90 = -22.22%, so elasticity is -1.22: elastic. The starting-point formula on the same points says -1.00, a full point of disagreement created purely by the choice of base, and revenue falls from $1,000 to $960 (-4.00%), exactly as the elastic classification predicts.

An inelastic stretch. Price rises from $5 to $6; quantity slips from 200 to 190. Midpoint elasticity is -0.28: quantity answered with barely a shrug, and revenue rises from $1,000 to $1,140 (+14.00%). Necessities with few substitutes live in this territory, which is why their prices can rise without emptying the shop.

A point on a straight-line curve. Demand Q = 500 – 20 x P, evaluated at P = $15: quantity is 200, the derivative is -20, and point elasticity is -20 x 15 / 200 = -1.50. Evaluate the same curve at $5 and the answer is -0.25: one straight line, every elasticity from elastic to inelastic along its length, which is why a single point figure must always name its price.

A point on a power curve. Demand Q = 10,000 x P^-1.8, at P = $10: quantity is 158.49 and the point elasticity is -1.80, equal to the exponent, at this price and at every price. Constant elasticity along the whole curve is what the power form is for.

Reading your results

Start with the classification, then interrogate it. An elastic result above about 2 on a product with no close substitutes should raise an eyebrow at the data before it raises a plan to cut prices; an inelastic result near zero should prompt the same suspicion in the other direction. Then read the revenue rows as the decision layer: the elasticity predicts them, and if the actual revenue movement contradicts the classification (elastic, yet revenue rose on a price rise), the two points are telling you something else moved between the observations. Finally, note how far apart the midpoint and starting-point figures sit: a wide gap means a large price change relative to the level, and arc averages over large stretches deserve the least trust of all, since the stretch itself crosses regimes.

Limitations

• Two points cannot separate price from everything else. Income changes, seasonality, promotions, stockouts and competitor moves all sit inside an observed quantity change. The estimate is only as clean as the window between the two points.
• Elasticity is local. Both modes describe behaviour at or between the specified points. Extrapolating a midpoint figure to a doubling of price, or a point figure along an unknown curve, invents data the observations never contained.
• The demand function in point mode is yours. The page differentiates the function you give it correctly; whether that function describes your buyers is an estimation question upstream of this page, and a precisely differentiated wrong function is still wrong.
• Short run and long run differ. Buyers answer slowly: fuel demand looks inelastic this quarter and elastic over years as vehicles and habits change. An elasticity carries an implicit time horizon, the gap between your observations, and comparisons across horizons mislead.

Frequently asked questions

What is the difference between midpoint and point elasticity?

Midpoint elasticity measures the average responsiveness between two observed points, using the average of each pair of values as its base, which makes it identical in both directions. Point elasticity measures responsiveness at one exact point on a demand curve, using calculus: the derivative of quantity with respect to price, scaled by price over quantity at that point. Use the midpoint form when you have two real observations; use the point form when you have a demand function and care about one specific price.

What does an elasticity of -1.22 mean in plain words?

That a 1% rise in price is associated with about a 1.22% fall in quantity, over the stretch measured. The negative sign is the direction (price and quantity move against each other, as they do for ordinary goods); the size, 1.22, is the strength, and because it exceeds 1 the demand is classified elastic, meaning quantity is the more responsive of the two and revenue moves against a price rise.

What happens if the price did not change?

Then elasticity has no finite value: the formula divides by a zero percentage price change. If quantity moved at an unchanged price, that is the perfectly elastic limit, and the page says so rather than printing a number. If neither price nor quantity changed, there is nothing to measure, and the page says that too. An unchanged observed price with a changed quantity usually means something other than price drove the quantity, which is a data story, not an elasticity.

Is elasticity the same at every price?

Generally no. Along a straight-line demand curve it runs from very elastic at high prices through unit elastic at the midpoint to very inelastic at low prices, as the worked example on this page shows (-1.50 at $15, -0.25 at $5, same curve). Only special forms, like the power function offered here, hold elasticity constant, which is a modelling choice with real consequences, not a discovery about the world.

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Method: midpoint (arc) elasticity on average bases with the starting-point form shown for comparison, and point elasticity as derivative x price / quantity on the function specified, exactly as defined on this page. Last reviewed: 13 October 2026.