Price increase calculator

What a price change does to profit

A price change moves profit on every unit you sell and, usually, the number of units you sell as well. The first effect is known and easy to compute; the second is a forecast. The calculator separates them by asking one question: how many units could I lose and still keep the same total profit from selling this product? If you believe the true loss will be smaller than that, the increase is worth trying; if you expect more, it is not. For a discount, the same question is reversed: how many more units must I sell?

The formula

Let p₀ be the old price, c the variable cost per unit, Δp the price change in dollars and Q the units sold. The total contribution to fixed costs and profit is Q × (price − c). It stays the same when Q₁ × (p₀ + Δp − c) = Q₀ × (p₀ − c), so Q₁ ÷ Q₀ = (p₀ − c) ÷ (p₀ + Δp − c), and the change in volume is −Δp ÷ (p₀ − c + Δp). The result is a percentage of current volume; in the first mode it is shown without a sign, with the wording changing between a rise (volume you can lose) and a discount (volume you must gain).

Fixed costs cancel out of the comparison, which is why they do not appear: they are the same whatever the volume. That also means the formula is only valid while your capacity and fixed costs stay as they are. If a higher volume forces you to hire or rent more, the break-even gain for a discount is larger than shown.

Worked example

A product sells for $100 and costs $60 in variable cost per unit, so each unit leaves $40 (40.0% of price). A 10% increase to $110 lifts that to $50 (45.5%). Selling 1,000 units a month earned $40,000 before fixed costs; after the rise you can sell 800.0 units and earn the same. If 15% of customers leave, contribution falls by $2,500 a month; if only 10% leave, it rises by $5,000. These prices and costs are made up for the illustration.

Limits of this method

It treats the volume change as a one-off and says nothing about what happens after: customers may return, competitors may follow, or the product may lose its position. It also assumes that variable cost per unit does not change with volume, which breaks down when volume discounts from suppliers apply or when overtime is needed to meet demand. Percent changes are on the current price, not in percentage points of margin: a rise from 40% to 44% margin is not a 4% price rise.

A published break-even volume formula appears in many pricing guides, for example the Impact Pricing blog, which shows that a 20% price rise on a 60% contribution margin lets you lose 25% of unit sales; this calculator gives the same result, and the formula above shows why. These blogs are not standards, so check the logic against your own numbers, which is what the worked example does.

How much volume can I lose after a price increase and still make the same profit?

Divide the extra dollars per unit by the new profit per unit. Raise a $100 price by 10% when each unit costs $60 to make and deliver. The profit per unit goes from $40 to $50, so you can lose 20.0% of your units before total profit falls ($10 ÷ $50). A 5% rise needs only 11.1%. This is the break-even volume change in the result.

Why does a thin margin make a price rise more powerful?

Because the same extra dollars per unit are a larger share of a small profit per unit. With variable costs of $60 on a $100 price a 10% rise lets you lose 20.0% of volume; with costs of $30 the same rise lets you lose only 12.5%. The thinner the margin, the more a price rise adds relative to the profit you have now, and the more customers you can lose before you are worse off.

What costs belong in 'variable cost per unit'?

Only the costs that change with each additional unit sold: materials, direct labor paid per unit, packaging, shipping you pay, payment-processing fees, sales commissions. Rent, salaries and software subscriptions are fixed and stay the same whether you sell one more unit or one fewer; they are left out because they do not change when the volume changes. If you use the full cost per unit including fixed costs, the calculator will overstate how much volume you can lose, because the profit per unit looks smaller than it really is.

How is this related to price elasticity?

Elasticity is the percent change in quantity divided by the percent change in price. The break-even volume change, divided by the price change, is the elasticity at which a price move leaves profit unchanged; here -2.00 for the +10% example. If your customers' elasticity is less negative than that (they react less), the rise adds profit; if it is more negative, it loses profit. Estimating the real elasticity needs data on past price changes; the price elasticity calculator on this site shows how it is computed from two price-and-quantity points.

What if I am considering a discount instead?

Enter a negative change. A 10% discount on the same product cuts the profit per unit from $40 to $30, so you must sell 33.3% more units just to earn the same total profit. A discount that looks small in percent terms needs a large increase in sales when margins are modest. If you know your cost, the discount calculator and the margin calculator show the effect on a single sale.

My supplier raised prices. What price keeps my profit?

Use the second mode. If a unit costing $60 rises 10% to $66 and you keep selling at $100, the profit per unit drops from $40 to $34, a margin of 34.0% instead of 40.0%. To keep the same dollars per unit, charge $106 (6.00% more). To keep the same percentage margin you would need $110 (10.00% more). Which one you choose is a business decision; the second one passes the whole cost increase on with its share of margin.

Sources: the formula is derived above from contribution margin (price minus variable cost per unit), the standard accounting definition, and checked by hand; the published example (+20% on a 60% contribution margin allows a 25% volume loss) appears on the Impact Pricing break-even volume page, a consultancy blog consulted October 28, 2026. Related: margin calculator, price elasticity calculator, break-even calculator, discount calculator and LTV to CAC calculator.

Estimates for planning only — not financial, tax or legal advice. Your own accounts and advisers decide. How we check our calculators.