How it works
How to calculate marginal revenue
Enter your starting point
How many units were you selling and at what price? This is your baseline -- the before picture.
Enter the new numbers
After a price change, promotion, or demand shift -- what is the new quantity and new price? The calculator compares both scenarios.
See your marginal revenue
The change in total revenue divided by the change in quantity. This tells you how much each additional unit is actually contributing. If it is negative, selling more units is costing you money.
When to use marginal revenue analysis
Specific situations where this number actually helps you make a better decision.
Before running a sale
Plug in your current price and expected volume, then your sale price and projected volume. If marginal revenue goes negative, the sale will lose you money even if you sell more units.
When testing a price increase
If you raise prices and volume drops, marginal revenue tells you whether the higher price more than makes up for the lost sales. Sometimes selling less at a higher price is the right move.
Evaluating bulk discounts
Offering 10% off for orders of 10+ sounds like a good retention play. But if marginal revenue on those extra units is below your cost, you are subsidizing volume at a loss.
Comparing seasonal performance
Run Q4 holiday numbers against Q1. If you sold more during the holidays but at steeper discounts, marginal revenue shows whether the volume spike was actually profitable.
Setting wholesale pricing
Wholesale means more units at a lower price. Marginal revenue tells you the minimum price per unit that still makes the larger order worthwhile compared to selling fewer units at retail.
Deciding when to stop discounting
Keep lowering the price in the calculator until marginal revenue hits zero or goes negative. That is your floor -- beyond that point, more sales means less money.
More free tools
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- BFCM sales projection calculatorBlack Friday and Cyber Monday revenue, planned ahead.
- MRR calculatorMonthly recurring revenue for subscription stores.
FAQ
Questions, answered
The extra revenue you get from selling one more unit. If selling 100 units more brings in $1,800 in additional revenue, marginal revenue is $18 per unit. It tells you whether increasing volume is actually making you more money.
Change in total revenue divided by change in quantity. (Q2 x P2 - Q1 x P1) / (Q2 - Q1). For example: 600 units at $28 vs 500 at $30 gives ($16,800 - $15,000) / (600 - 500) = $18 per unit.
Yes. If you drop your price enough that total revenue falls even though you sell more units, marginal revenue is negative. That means each additional unit you sold actually reduced your overall earnings.
Average revenue is total revenue divided by total units. Marginal revenue is the change in revenue from the change in units. Average tells you the overall picture. Marginal tells you what happens at the edge -- whether selling more is still worth it.
Before any pricing decision that trades price for volume -- sales, promotions, bulk discounts, seasonal markdowns. It tells you if the trade-off is profitable or if you are giving away margin for volume that does not pay for itself.
Then selling those extra units loses money. Your marginal cost exceeds marginal revenue, so each additional sale is a net loss. Either raise the price, lower costs, or accept selling fewer units at the original price.
Yes. Replace units with engagements, projects, or hours. If you lower your hourly rate to get more clients, marginal revenue tells you whether the extra volume makes up for the lower rate.
Whenever you change prices or run a promotion. It is not a metric you track daily -- it is a decision-making tool you use before and after specific pricing moves.
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