About

Pricing is one of the most powerful levers in a business's strategy. However, simply raising prices does not guarantee higher revenue; often, it reduces the quantity sold. This Revenue Calculator helps business owners and students understand the relationship between Price, Quantity, and Total Revenue.

The tool includes a 'Price Elasticity' simulator. In economics, Price Elasticity of Demand measures how sensitive customer demand is to price changes. A highly elastic product (luxury goods) will see a sharp drop in sales if prices rise, while an inelastic product (utilities) will remain stable. Use this tool to find the 'sweet spot' for your pricing.

Formulas

The fundamental formula for Total Revenue is:

TR = Price × Quantity

When simulating price changes with Elasticity (E):

%ΔQ = E × %ΔP

Reference Data

Product Type	Elasticity (E)	Interpretation	Pricing Strategy
Perfectly Inelastic	0.0	Quantity doesn't change with price.	Raise Price (Maximize Revenue)
Inelastic	0.0 to -1.0	Quantity changes less than price.	Price increases grow revenue.
Unit Elastic	-1.0	Changes offset each other.	Revenue stays constant.
Elastic	< -1.0	Quantity changes more than price.	Price decreases might grow revenue.
Luxury Goods	-1.5 to -3.0	Highly sensitive to price.	Competitive pricing is key.

Frequently Asked Questions

Price elasticity is almost always negative because price and demand have an inverse relationship (Price up, Demand down). If you enter -1.5, it means for every 1% price increase, sales drop by 1.5%.

You need historical data. Compare two periods: (% Change in Quantity Sold) / (% Change in Price). If you raised prices by 10% and sales dropped 5%, your elasticity is -0.5.

Revenue is the total money coming in before expenses. Profit is Revenue minus Costs. This calculator focuses solely on top-line Revenue generation.

The optimal price depends on your marginal costs. However, regarding revenue alone, if your product is inelastic (E > -1), raising prices usually increases revenue until demand becomes elastic.