Simulation

What If You Raise or Lower Price?

Raising price 10% with elasticity 1.5 drops volume 15% (to 850 units), so revenue falls from $50,000 to $46,750. The most you could cut volume and break even is about 9.1%. If your customers are loyal (low elasticity), the same 10% raise grows revenue instead.

Results

Visualization

Cashbizly provides illustrative business estimates only. Results depend on your inputs and assumptions and are not accounting, tax, or legal advice. Consult a CPA or financial advisor before major decisions. Tax-year figures (mileage, QBI, SEP, etc.) are labelled by year and should be verified at IRS.gov.

How It Works

New Volume = Current Volume x (1 + Price%Change x -Elasticity). Elasticity below 1 means demand is inelastic (price rises grow revenue); above 1 means elastic (price rises shrink revenue). The break-even volume drop for a price increase is Change%/(100%+Change%). This is a static, constant-elasticity model — real demand curves bend.

What Should You Do?

Scenario 1: gas-station inelastic demand (0.3) — a 10% raise lifts revenue ~7%. Scenario 2: a competitive SaaS (elasticity 2.5) — a 10% raise cuts revenue ~19%. Scenario 3: a 10% cut with elasticity 1.0 grows volume 10% and holds revenue flat.

Frequently Asked Questions

What is a realistic elasticity?

Commodities and necessities are often 0.2-0.8 (inelastic); discretionary and competitive goods 1.5-3.0. Estimate from your own past price experiments.

Is constant elasticity realistic?

No — it is a simplification for quick testing. Real demand is a curve, not a line. Treat results as directional.

When should I actually raise price?

When elasticity is below 1, or when you have differentiated value. Pair with our Markup and Margin tools to set the new price.

Authoritative References

Investopedia — Price Elasticity of Demand — Elasticity definition and revenue relationship.
Corporate Finance Institute — Elasticity — Elasticity and total-revenue test.