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Price Elasticity Calculator

Pressure-test any FMCG price move in real time. Drag the sliders, watch how far your sales volume and your contribution move, then read the break-even line, which draws the volume you would need for contribution or Net Sales to land flat. It is the same interactive model the full RGM Academy course uses for Pricing Lesson 1, and you can use it here without signing up or paying.

Updated 20 October 2026Extracted from the Pricing module, lesson 1: Price Elasticity of Demand
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Guided walkthrough

Explore the tool, from setup to common mistakes

Five short sections explain the scenario, what each control does, how to read the output, and the mistakes to avoid. Open whichever helps. The tool above works without them.

5.1Scenario setup

The starting SKU, market, and assumptions the model makes.

You're running pricing for CrunchField Heritage 300g, a 300g biscuit SKU. It sits at a $4.29 list price, which is what you charge the retailer and not what a shopper pays on the shelf. After your 17% trade terms you keep $3.56 a pack, your pocket price, and each pack costs $2.06 to make and deliver. It moves 2 million units a month, about $103M of gross sales a year at the list price and $85.5M of Net Sales once the trade terms are paid. Your contribution margin is about 42.1% of Net Sales, and your working elasticity assumption is -1.7, a starting point you will test rather than a figure anyone has measured.

A recent input‑cost spike has put pressure on next quarter's forecast, and the commercial team is debating whether to take +3%, +5%, or +8% on the list price, or whether to hold price and absorb the margin hit. Finance wants a recommendation by Friday.

Your objective

Use the calculator to find the price move that earns the most contribution at your elasticity, meaning the percent of volume you give up for every 1% you add to the price. Then test that answer twice before it goes to Finance: once with shoppers more price‑sensitive than you assumed, and once at a different pass‑through, because the retailer decides how much of your increase reaches the shelf. Below 100% a rise costs you less volume, and above 100% it costs you more.

Key assumptions

  • The calculator models a single SKU on its own. It ignores cannibalization, the sales that shift between this pack and the rest of your range when its price moves, and it assumes competitors hold their prices and your distribution stays where it is.

  • The log‑linear model, which the calculator uses by default, holds elasticity constant across the price range, so the same percent added to the price costs you the same percent of volume wherever the price starts. The linear model instead holds the response steady in units, so each extra cent on the price costs the same number of units whether the price is low or high.

  • Variable cost is held constant. Fixed costs are excluded. This is a marginal profit calculator, not a P&L.

  • Pass‑through defaults to 100%, meaning the list price move reaches the shelf unchanged. In real trade it seldom comes out at exactly 100%, because the retailer sets the shelf price and can pass on less than your increase or more. The Pass‑Through Rate control lets you test both: below 100% the retailer absorbs part of your increase, and above 100% the shelf price rises by more than your list price did.

  • Every money figure is the brand's own, counted on its pocket price: your list price less the 17% you give back in trade terms. Count it on the list price instead and you hand yourself money the retailer keeps.

  • Profit break‑even math runs on contribution margin, the money left after the costs that rise and fall with each unit you sell, rather than on a fully loaded cost of goods sold. A fully loaded figure also carries costs that stay the same whether or not you make one more unit. This tool treats the whole $2.06 cost to make and deliver as variable, so the 42.1% contribution margin on screen is the margin the break‑even sales change (BESC) figures use, with no conversion. Your gross margin, before the $0.34 of delivery, is higher, at about 51.7% of Net Sales.

5.2Controls & toggles

Every input the calculator exposes, its range, and what it changes.

ControlRangeDefaultWhat it changes
Price / Price Change$2.50 to $8.00 (or -41% to +86%)$4.29 (base list price)The list price you set, before pass‑through decides how much of the move reaches the shelf. Switch the control to percent mode when you are testing small moves and want to see how sensitive profit is to a point either way. Stay in dollar mode when you want an exact list price to the cent. A round‑number threshold such as $4.99 to $5.00 matters on the shelf price, which the retailer sets, so this control does not show it.
Price Elasticity (ε)-4.0 to -0.5 in 0.1 steps-1.7The volume response per 1% price change. -1.7 is the calculator's starting assumption, there for you to test. Drag it toward -0.8 to see a brand that keeps most of its volume through a price rise. Try -2.62, the average across 1,851 published academic estimates, and -3.5, to see a move when shoppers react far more sharply.
Demand ModelLinear | Log-LinearLog-LinearLog‑linear holds the percentage response steady, so the same percent added to the price costs the same percent of volume wherever the price starts, and elasticity stays where you set it. Linear holds the response steady in units instead, so every cent on the price costs the same number of units, which makes elasticity bite harder as the price climbs. Elasticity compares the percent of volume lost with the percent added to price. As the price climbs, the same cent is a smaller percent of the price and the units it costs are a bigger percent of the volume left, so that ratio grows from both ends. Log‑linear is the standard for CPG.
Break-Even AnalysisOff | Contribution | Net Sales | Optimal PriceOffOverlays the volume you would have to keep for contribution or Net Sales to end up where it started, or marks the list price that earns the most contribution at your elasticity. The fastest way to see whether a price decision pays for itself.
Pass-Through Rate20% to 150% in 5% steps100% (full pass-through)The share of a list price move that reaches the shelf. Below 100% is compression: the retailer takes part of your rise on its own margin, usually to hold its shelf price close to the competitors it measures itself against, a comparison it tracks as a price index (PI). Above 100% is over‑pass‑through: the retailer adds more than you did, using your increase as cover to take a little extra margin for itself.
5.3Step-by-step exploration

8-step guided exploration of the scenario.

  1. Start at the base scenario and read the room

    Leave every control at its default. The chart shows the demand curve at an elasticity of -1.7, the slider's starting setting and an assumption for you to test; the dashed line labelled $4.29 marks your current list price and the 2M‑unit volume it clears. The main card under Results (contribution, with price, volume, Net Sales and margin under it) shows zero change against where you started. This is your calibration point.

    Expected outcome: Contribution should read about $3.0M per month at a 42.1% contribution margin. Remember this number, because every subsequent price move is judged against it.
  2. Take the price up 3%, then 5%, and watch the Contribution figure

    Switch the price slider to % mode and try +3%, then +5%. Read the Contribution change. Both moves should LIFT contribution at ε = -1.7, because the volume you lose (roughly 3 x 1.7, or about 5%, and 5 x 1.7, or about 8.5%; the log‑linear model lands a touch under both) is less than the margin you gain per unit. Net Sales, though, fall on both, and that split is the point.

    Expected outcome: +3% gives about +2% contribution, and +5% gives about +3%. Net Sales dip slightly on both (about -2.1% and -3.3%), the classic 'profit up while revenue falls' pattern for any brand past unit‑elastic.
  3. Turn on the Contribution break‑even overlay

    Click the Contribution break‑even button. A dashed line labelled BE Volume (break‑even volume) appears on the chart marking the minimum volume you need to hold contribution constant at your current price. If your volume is ABOVE that line, the price move is profit‑positive; BELOW it, profit‑negative.

    Expected outcome: At +3% your volume sits well above that line. The move could lose -6.7% of volume and still hold contribution flat, and at your elasticity it costs you about -4.9%. So your elasticity could sit about 0.6 of a point further from zero, at -2.33 against your -1.7, before the move stops adding contribution. At +10%, you're either just above or below depending on elasticity, which is exactly the tension Finance wants quantified.
  4. Stress‑test elasticity to -2.62 and -3.5

    Keep the price at +5% and drag the Price Elasticity slider to -2.62, the average across 1,851 published academic estimates. Then take it further, to -3.5, to see how the same move behaves when shoppers react far more sharply. Watch contribution.

    Expected outcome: At an elasticity of -2.62, the +5% move turns contribution negative, about -1.5%. That is because -2.62 is further from zero than this move's break‑even elasticity of -2.30 on the default Log‑Linear model, so the move fails the downside case. At -3.5 the same move takes about 5.6% off contribution. This is the stress test Finance will ask for: what happens to the plan if your elasticity assumption turns out to be too optimistic?
  5. Add pass‑through compression

    Reset elasticity to -1.7, keep price at +5%, and drag Pass‑Through Rate to 70%. This simulates a retailer absorbing 30% of your list price rise to protect their price index. The slider's +5% stop lands on a $4.50 list price, up 4.9%, and the shelf price the shopper actually sees rises by only 3.4%, so you lose less volume, while every unit you sell still carries your whole list price rise in margin.

    Expected outcome: Contribution comes out HIGHER than it did at 100% pass‑through, because you keep the margin on your whole list price rise while paying for lost volume only on the smaller rise the shopper sees. This is why a retailer absorbing part of your rise can leave you better off on contribution.
  6. Test a price cut, walking through all three overlays

    Switch pass‑through back to 100%, then drag the price to -5%. Click the Net Sales break‑even button. The BE Volume line shows the volume gain needed for Net Sales to stay flat. Switch to Contribution. The line jumps higher, showing what it takes to hold contribution. Finally, switch to Optimal Price. The marker labelled Optimal that appears sits at the list price that earns the most contribution at your elasticity, so after a cut you can see straight away how far below that price you have dropped.

    Expected outcome: At ε = -1.7, a -5% cut delivers roughly +8.9% volume. That clears the ~+5% needed to hold Net Sales (they actually rise about +3.6%) but falls WAY short of the ~+13% needed to hold CONTRIBUTION, which lands about -3.7%. The Optimal Price overlay puts its marker at a $6.03 list price, which leaves you a pocket price about 2.43x what a unit costs to make and deliver. That is where contribution tops out, so the cut has moved you further from it rather than closer. The contribution break‑even note shows why: this cut only adds contribution if elasticity is further from zero than -2.46, and your -1.7 is much closer to zero.
  7. Compare Log‑Linear vs Linear models at plus and minus 10%

    Drag price to +10%, then switch the Demand Model control between Log‑Linear and Linear. The two curves diverge sharply at the extremes: Linear says you lose more volume on a big price rise, Log‑Linear says you lose less.

    Expected outcome: Log‑Linear is the standard for CPG. On a big move Linear is the more cautious of the two, with more volume lost on a rise and less won on a cut. If switching between the two models changes what you would recommend, your real elasticity is probably not constant across the price range. That calls for a fresh estimate from scanner data, the checkout records of what actually sold at each price, rather than more trial and error on the model switch.
  8. Land on your Friday recommendation

    Leave elasticity at your working assumption and move the price slider in 1% steps until contribution stops climbing. Note the peak‑price and the peak‑contribution numbers. Then test how well it holds: keep the price at that peak, drag elasticity to -2.62, and read contribution again. That's your downside case.

    Expected outcome: Your recommendation should be: 'Take +X% on the list price. Expected contribution lift +Y%, downside case at ε = -2.62 is Z%, with a break‑even elasticity of W beyond which (more negative) the move goes negative.' Four numbers, one sentence, decision‑ready.
5.4Reading the output

Every KPI, the formula behind it, and how to interpret a positive or negative value.

KPIFormulaHow to read it
Volumebase volume x (new price / base price) ^ elasticityUnits sold per period at the current effective shelf price. A negative delta means the price move cost you volume. Sanity‑check the change against price change multiplied by elasticity: on a rise the log‑linear model gives you a slightly smaller volume loss than that product, and on a cut a slightly bigger volume gain. A delta far away from the product usually means pass‑through is set below 100%.
Net Salespocket price x volume, where the pocket price is the list price less 17% trade termsOn the default Log‑Linear model at 100% pass‑through, Net Sales have no peak. When elasticity is further from zero than -1.0, they fall with any price rise, at exactly -1.0 they hold flat, and closer to zero than -1.0 they climb. Read whether Net Sales went up or down, and by how much, next to what Contribution did. On Linear, and on Log‑Linear below 100% pass‑through, Net Sales can peak, and when they do they peak at a lower price than contribution. Between those two prices every extra cent trades revenue for profit.
Contribution(pocket price - cost to make and deliver) x volumeThe number Finance cares about. Where Net Sales have a peak, contribution tops out at a HIGHER price, because a lost unit costs Net Sales its whole pocket price but costs contribution only its margin. So past the Net Sales peak a rise can still add contribution. On this SKU, a 1% move in contribution is worth about $30,000 a month.
Margin %(pocket price - cost to make and deliver) / pocket priceWith volumes held, each 1% on price adds about (1 - margin) points of margin percent: about 0.6 of a point at the base 42% margin. Where the starting margin is low (under 25%), a 1% price move lifts margin % by about three quarters of a point or more. That is why a low‑margin business gains the most from a price rise that holds, and loses the most when one does not.
Volume change / Contribution changeΔ vs base scenarioOn the main card, A month at this price, against the base price. The Contribution change figure turns green when the price move adds contribution, and red when it cost more in volume than it earned in margin. Volume change should always move in the opposite direction to Price change. If it doesn't, something is wrong with the model setup.

The four readings in the main card together tell the margin / volume trade‑off in one glance. Volume tells you how much of your sales the move cost, and Net Sales tell you whether you have crossed unit‑elastic (the point where a price rise starts shrinking total revenue instead of growing it). Contribution tells you whether the move pays for itself, and Margin tells you what it does to the profit percentage that reaches the P&L. If Volume is negative and all three of Net Sales / Contribution / Margin are positive, you're in the healthy sweet spot between the category price and the elasticity -1.0 line.

The Power of 1% says a 1% price improvement typically delivers around +11.1% operating profit at median CPG margins, and the main card lets you verify that leverage in your specific numbers before taking the recommendation to the committee.

5.55 common mistakes to avoid

Diagnostic patterns that catch the most common misuse of this calculator.

  1. Mistake 1Using category elasticity for a brand decision
    Symptom: The +5% move that looked safe at the category ε of -0.9 destroyed brand share and lost 12% volume in the first 8 weeks.
    Fix: Brand elasticity is how much one brand's own sales move with its own price. Category elasticity is how the whole category's sales move when every brand in it prices up together, and brand elasticity is much steeper. When a single brand raises price alone, most of the volume it loses goes to the brands beside it rather than out of the category. So if the only figure you have is a category one, such as -0.9, drag the Price Elasticity slider well past it and run the move at several steeper settings before you set the price on one brand.
  2. Mistake 2Treating your own price move as though it lands on the shelf unchanged
    Symptom: Volume held up better than expected, and you took the win, only to discover 6 months later that the retailer absorbed 40% of your rise and now expects trade compensation.
    Fix: Plan on a range of pass‑through rates, and run the calculator across it. There is no normal pass‑through rate to fall back on: it is a decision one buyer makes about one item, so the same brand gets different answers at two retailers on the same day. You can still narrow it, because retail margin is quoted as a share of the shelf price. A buyer who wants to hold the same cash margin on every pack adds your extra cents to the shelf price and stops there. Because the shelf price is bigger than the price they pay you, those same cents come out as a smaller percentage rise. That works out to exactly one minus the share of the shelf price they keep, so 70% on an item where the retailer keeps 30%. A buyer who works to a margin percentage recalculates the shelf price off your new cost instead, so 100% of the rise reaches the shelf and they take more cash on every pack. On a line the retailer price‑checks against a rival, the buyer may pass on nothing until the rival moves, so extend the low end there. Run the move at three pass‑through settings across that range and take the range of volume outcomes into the meeting rather than a single number. Then read the real shelf price at each retailer once the change is live, because the shelf price is the retailer's own decision and its pricing plans are not yours to collect. The Pass‑Through Rate control goes both ways: below 100% the retailer absorbs part of your move, and above 100% they raise the shelf by more than you did, using your increase as cover to take a little extra for themselves.
  3. Mistake 3Optimizing for Net Sales instead of Contribution
    Symptom: Volume and Net Sales both grew, the price cut 'worked', but contribution fell. Finance catches the move 18 months later, and rebuilding your credibility takes longer than the extra share lasted.
    Fix: Above ε = -1.0 magnitude, Net Sales peak at a LOWER price than contribution does. Always read the contribution change first, Net Sales second. The Net Sales break‑even overlay is there to show you what the move does to the top line. The number you decide on is contribution.
  4. Mistake 4Assuming elasticity is static across the price range
    Symptom: The +3% move at ε = -1.7 delivered as predicted; the +8% move at the same assumed elasticity blew out, with volume down 20% (not 13.6%).
    Fix: Elasticity is often ASYMMETRIC, which means a price rise loses more volume than a cut of the same size wins back. It is often NON‑LINEAR as well, so the number that held for a small rise can understate what a large one costs you. The calculator uses one elasticity for a rise and a cut, so test a cut at a shallower setting than the rise. Switch the Demand Model to Linear to see a rise bite harder the further the price climbs. On a big move, check the answer against an elasticity measured from scanner data at that price point rather than an average figure.
  5. Mistake 5Treating ε as a single number rather than a distribution
    Symptom: The deck shows ε = -1.7 and a +5% decision; nobody asks what happens if the true ε is -2.2. Six months later the volume shortfall hits the P&L and the committee demands a post‑mortem.
    Fix: Take three elasticity cases into every pricing recommendation: your working assumption (-1.7), the average across 1,851 published academic estimates (-2.62), and a harsher downside where shoppers react far more sharply (-3.5). Use the elasticity slider to produce the contribution outcome under each case. A price recommendation that carries no downside case is half a recommendation, and it is the half the committee will ask about.
Related concepts

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Go further inside Pricing

This calculator is the sandbox slice of Lesson 1: Price Elasticity of Demand. Each of the other 8 Pricing lessons teaches a complementary concept that sharpens how you read the output above.

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