Price Elasticity of Demand Calculator

Enter your product details to calculate the change in demand due to price shifts (PED).

New Price::

Initial Price::

New Quantity::

Initial Quantity::

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Price Elasticity of Demand Calculator

The Price Elasticity of Demand (PED) calculator helps evaluate how changes in product pricing impact customer demand. By calculating the PED value and revenue changes, businesses can decide whether to raise prices and sell less, or lower prices and sell more.

What Is Price Elasticity of Demand?

Price Elasticity of Demand (PED) is an economic metric that measures how sensitive the quantity demanded of a product is to a change in its price. It helps understand consumer behavior in response to price adjustments.

Price Elasticity of Demand Formula

PED = Percentage Change in Quantity (ΔQ/Q) Percentage Change in Price (ΔP/P)

Alternative representation (midpoint method):

PED = Q₁ - Q₀ (Q₁ + Q₀)/2 ÷ P₁ - P₀ (P₁ + P₀)/2

P₀ = Initial price
P₁ = Final price
Q₀ = Initial quantity demanded
Q₁ = Final quantity demanded
PED = Price elasticity of demand

How to Calculate Price Elasticity of Demand

Gather Product Data: Collect historical price and quantity demanded data.
Calculate Percentage Changes: Determine the percentage change in price and quantity.
Apply the Formula: Insert the values into the PED formula to calculate elasticity.
Interpret the Result:
- Elastic Demand (PED > 1): Consumers respond strongly to price changes.
- Inelastic Demand (PED < 1): Consumers are less responsive to price changes.
- Unitary Elastic Demand (PED = 1): Price and demand change proportionally.
- Perfectly Inelastic Demand (PED = 0): Quantity demanded remains constant regardless of price.
- Perfectly Elastic Demand (PED = ∞): Any price change causes an infinite change in quantity demanded.

Example Calculation

Scenario: A bakery sells cupcakes at $5 each (100/day). The price is increased to $5.50, and sales drop to 80/day. Calculate PED, revenue, and revenue change.