Pricing strategy
Price elasticity of demand, midpoint.
Enter the old and new price with the quantity sold at each. Get the elasticity by the midpoint method, whether demand is elastic or inelastic, and the revenue change.
Elasticity = |% change in quantity / % change in price|, each measured against the average of old and new. Cutting the price from $70 to $60 while quantity rises from 2,800 to 3,000 gives 6.9% / -15.4%, an elasticity of about 0.45.
Your numbers
Result
Worked example
Using the OpenStax Figure 5.2 numbers: the price falls from $70 to $60 and quantity rises from 2,800 to 3,000. The midpoint quantity is 2,900, so the change is 200 / 2,900 = 6.9%. The midpoint price is $65, so the change is -10 / 65 = -15.4%. Elasticity is 6.9 / 15.4 = 0.45 (the exact value, 0.448, rounds to the same), which is inelastic, and revenue falls from $196,000 to $180,000.
How it works
% change in quantity = (Q2 - Q1) / ((Q1 + Q2) / 2); % change in price = (P2 - P1) / ((P1 + P2) / 2). Dividing the first by the second and dropping the minus sign gives the elasticity. Because both changes use the same average base, the answer is the same whether the price goes up or down.
Above 1 demand is elastic, below 1 it is inelastic, and at 1 it is unitary. The tool also shows the simple percentage version (change measured from the old values) so you can see why the midpoint method is preferred: that version gives a different number for the same two points when you swap them.
Elasticity describes the stretch between your two points. It is not a constant, and other changes between the two periods (season, promotion, competitors) are mixed into the result.
Sources and basis (opened 2026-10-08): 5.1 Price Elasticity of Demand and Price Elasticity of Supply - Principles of Economics 3e | OpenStax for the midpoint formulas, the elastic, unitary and inelastic cut-offs, and the $70 to $60 example; 5.3 Elasticity and Pricing - Principles of Economics 3e | OpenStax for how elasticity relates to total revenue.
Educational pricing maths. A two-point result reflects everything that changed between the two periods, not price alone. Everything runs in your browser. Nothing you type is sent or stored.
FAQ
What is the midpoint method for elasticity?
It measures each percentage change against the average of the old and new value. The result is the same whichever point you call the start, which the simple percentage method does not guarantee.
What does an elasticity of 0.45 mean?
Quantity changes by about 0.45% for each 1% change in price. Below 1 is called inelastic, so a price cut lowers total revenue and a price rise raises it.
Why did I get a different number than a simple percentage change?
The simple method divides by the old value only, so the answer depends on direction. The midpoint method uses the average of the two values, so it does not.