Optimal Price Calculator
Calculate the optimal selling price to maximize profit using price elasticity of demand
Calculate Optimal Price
Cost of producing one additional unit
Price Elasticity Data Points
Enter two different price-quantity combinations to calculate price elasticity of demand
Initial Price Point
Changed Price Point
Please enter all required values with different price points to calculate optimal pricing.
Example: Coffee Shop Pricing
Scenario
Product: Premium coffee cups
Marginal cost: $2.50 per cup
Initial pricing: $5.00 → 100 cups sold
Changed pricing: $4.50 → 120 cups sold
Calculation
Price elasticity = ((120-100)/100) / ((4.50-5.00)/5.00) = 20% / -10% = -2.0
Optimal price = $2.50 × (-2.0 / (-2.0 + 1)) = $2.50 × 2.0 = $5.00
In this case, the initial price was already optimal!
Pricing Strategy Tips
Test Different Prices
Use A/B testing to gather real price-demand data
Consider Market Conditions
Factor in competition and economic conditions
Monitor Elasticity
Price elasticity changes over time and seasons
Price Elasticity Guide
Understanding Optimal Pricing
What is Optimal Pricing?
Optimal pricing is the price point that maximizes your total profit by balancing the trade-off between price per unit and the number of units sold. It takes into account how sensitive customers are to price changes (price elasticity of demand).
Key Benefits
- •Maximize total profit and revenue
- •Better understand customer price sensitivity
- •Make data-driven pricing decisions
- •Optimize inventory turnover
Formula Explanation
OP = MC × (PED / (PED + 1))
- OP: Optimal Price
- MC: Marginal Cost per unit
- PED: Price Elasticity of Demand
Note: This formula assumes a linear demand curve and profit maximization as the primary goal.