Price Elasticity of Demand
Measure how sensitive demand is to a price change.
PRICE ELASTICITY
-0.75
Inelastic — room to raise price
Elasticity = % change in quantity ÷ % change in price. |Elasticity| above 1 means demand is sensitive to price.
What is Price Elasticity of Demand?
Price elasticity of demand measures how much the quantity sold changes when you change price. It tells you whether a price move will help or hurt total revenue.
Elasticity = % change in quantity ÷ % change in price
How to read your result
- |Elasticity| > 1 = elastic: demand is sensitive, raising price cuts revenue.
- |Elasticity| < 1 = inelastic: you have room to raise price.
- = 1 is unit elastic: revenue is unchanged by small price moves.
- Test real price changes — estimates beat guesses.
Frequently asked questions
What does elastic vs inelastic mean?
Elastic demand (|elasticity| > 1) drops sharply when price rises. Inelastic demand (< 1) barely moves, so you can raise price with less risk to volume.
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