Pricing strategy
Optimal price from a demand line.
Enter two observed price and quantity points and your unit cost. The tool fits a straight demand line and finds the price that maximises revenue and the price that maximises profit.
With demand Q = a - bP, the profit-maximising price is (a/b + unit cost) / 2. Selling 900 at $10 and 500 at $14 gives Q = 1,900 - 100P; at a $6 cost the best price is $12.50, earning $4,225.
Your numbers
Result
Worked example
You sold 900 units at $10 and 500 at $14. The slope is (900 - 500) / (14 - 10) = 100 fewer units per extra dollar, so Q = 1,900 - 100P and demand reaches zero at $19. At a $6 unit cost, the profit-maximising price is (19 + 6) / 2 = $12.50, selling 650 units for $4,225 of profit. At $10 profit was $3,600 and at $14 it was $4,000. Revenue alone peaks at 1,900 / 200 = $9.50 (950 units, $9,025).
How it works
A firm that maximises profit sets output where marginal revenue equals marginal cost. For a straight-line demand Q = a - bP with a constant unit cost c, that works out to price = (a/b + c) / 2. Revenue alone peaks at price = a / (2b), which equals the profit-maximising price when cost is zero.
The big caveat is the straight line. Two points fix a line exactly, but real demand is not a perfect line and was measured under specific conditions. The further the suggested price is from the two prices you tried, the less you should trust it, and the tool warns you when it falls outside them. Treat the answer as a hypothesis to test with a small price experiment.
The cost used is a constant cost per unit. Fixed costs do not change the best price.
Sources and basis (opened 2026-10-08): 9.2 How a Profit-Maximizing Monopoly Chooses Output and Price - Principles of Economics 3e | OpenStax for the profit-maximising rule that marginal revenue equals marginal cost. The straight-line fit and the two price formulas are algebra on your inputs.
Educational model with strong assumptions. Not business or financial advice. Everything runs in your browser. Nothing you type is sent or stored.
FAQ
Why does the best price depend on my unit cost?
Profit is price minus cost times units. A higher cost pushes the profit-maximising price up, because each sale earns less and fewer sales at a higher margin can earn more.
Is the revenue-maximising price the same as the profit-maximising price?
Only when unit cost is zero. With a cost above zero the profit-maximising price is higher than the revenue-maximising one.
How far can I trust the answer?
Only as far as demand really is a straight line between your two observations. If the suggested price is outside the range you tried, test it on a small scale first.