Price Elasticity of Demand Calculator

How to Calculate Price Elasticity of Demand

Calculating price elasticity can be done with the following variables:

1. Initial price


2. Initial quantity


3. Final price


4. Final quantity

Then, you will need to calculate the change in both the quantity and the price. You can then employ the following formula for calculating the price elasticity of demand: Where:

• PE = Price elasticity of demand


• QC = Quantity change


• PC = Price change

Understanding Your Results

Your result will be a single number that will likely not be a whole number. If the number you get is below 1.0, that means it is inelastic. This means that the change in price results in a less than proportional change in quantity demanded. If your result is over 1.0 that means it is elastic. This means that a greater than 1% change in price results in a more than proportional change in quantity demanded. Alternatively, if the result is exactly 1.0, it means a 1% change in price results in a proportional 1% change in quantity demanded.

How to Use the Price Elasticity of Demand Tool

Calculating the price elasticity of demand can be time-consuming and confusing. Our tool makes it easier than ever to calculate this metric with little to no work involved. The steps involved with using the tool includes:

1. Enter the total initial price of the order.


2. Enter the initial quantity that you were getting for that initial price.


3. Enter the total final price.


4. Enter the final quantity, or the new quantity proposed to get you the final price.


5. Hit the calculate button and instantly get your results.

Calculation Example

We are going to be placing an order for a new batch of our products. We want to make sure we are getting the best deal and to do that we will review the tiered pricing the proposed to us and find the price elasticity of demand for it. The first tier would be 1,000 units for $7.50 each for a total of $7,500. The other tier would be 1,500 units for $7.30 each for a total of $10,950. We can then use this tool by entering 7,500 into the initial price field, 1,000 into the initial quantity field, $10,950 into the final price field and then 1,500 into the final quantity field. We can now hit calculate to get an answer of 1.09, meaning this is elastic.