Enter the initial price and quantity of a product, a separate price and resulting quantity sold, as well as the marginal costs of the product into the optimal price calculator. The calculator will display the optimal price that leads to the maximum profit.

## Optimal Price Formula

The following formula can be used to calculate the optimal price to sell a good at.

OP = MC * (PD/PD+1)
• Where OP is the optimal price
• MC is the marginal cost
• PD is the price elasticity of demand.

The price elasticity of demand is a measure of how a quantity of good sells with respect to changing prices. To learn more click the link above.

To calculate an optimal price, multiply the marginal cost by the sum of the price elasticity of demand plus 1.

## Optimal Price Definition

An optimal price is the maximum price a business can charge for a good to maximize revenue. In other words, is the best balance between price and demand.

## How to calculate optimal price?

How to calculate optimal price?

1. First, determine the marginal cost

The marginal cost is the cost of producing one unit of product. This cost is usually lower with more volume.

2. Next, determine the price elasticity of demand

For a more detailed description, visit our PED calculator through the link above. In short, this will be a measure of how the number of goods changes when the price is changed. You will need to track quantities sold at certain price points to determine this value.

3. Calculate the OP

Calculate the optimal price using the formula above.

## FAQ

What is an optimal price?

An optimal price is the price a good or service should be sold to maximize total profit. This does not necessarily mean maximizing profit per unit. Reducing prices can also lead to more overall profit if more product is sold as a result.

What is marginal cost?

Marginal cost the cost to produce 1 unit of product. The larger the quantity of parts the lower the marginal cost typically goes.