Observed Price Elasticity Calculator

How the observed price elasticity calculator works

The midpoint method divides each price or quantity change by the average of its old and new observations. The base-period method divides by the old observation. Observed elasticity is the quantity percentage change divided by the price percentage change under the same chosen convention. Both values are shown so denominator choices remain visible.

Zero required average/base denominators or zero price change make the relevant elasticity unavailable. The sign is retained; the calculator does not silently turn negative responses into a positive magnitude. Revenue change separately multiplies each price and quantity before comparing the two periods.

Align products, units, period length and measurement definitions. Promotions, seasonality, mix and other factors can change quantities alongside price. Two observations do not establish a causal elasticity or a stable curve and cannot justify a forecast of the outcome from another price change.

Worked example

Price rising from 10 to 12 and quantity falling from 100 to 80 gives midpoint elasticity about −1.2222 and base-period elasticity −1. Revenue changes from 1,000 to 960, or −40. If the new quantity is 90 instead, new revenue is 1,080 and revenue change is +80.

Sources and assumptions

The source material explains the underlying calculation or pricing structure. Entered prices, costs, schedules and scenario choices are your assumptions; this tool does not obtain supplier quotes or predict actual results.

• CFI: price elasticity and denominator conventions