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Marginal Revenue Calculator

Enter revenue and quantity before and after to find marginal revenue.

How it is calculated

You enter total revenue and quantity sold at two points, before (R1, Q1) and after (R2, Q2). The tool calculates marginal revenue = (R2 − R1) ÷ (Q2 − Q1), which is the extra revenue earned per extra unit sold. Revenue must be total revenue (price times quantity), not price per unit. If both quantities are equal there is nothing to divide by, so the tool returns no result. The order of the two points does not matter for the marginal revenue itself, since a fall in revenue over a fall in quantity gives the same ratio, but the revenue change and quantity change are shown with their signs. Results are in US dollars with two decimals.

Worked example

A shop earns $5,000 from 100 units and $5,400 from 110 units. Change in revenue: 5,400 − 5,000 = $400.00. Change in quantity: 110 − 100 = 10.00 units. Marginal revenue: 400 ÷ 10 = $40.00 per extra unit. Note that the average revenue per unit was 5,000 ÷ 100 = $50 at first and 5,400 ÷ 110 ≈ $49.09 afterwards. Marginal revenue ($40) sits below the average price because selling more units required a lower price on all of them.

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Common mistakes

  • Entering the unit price as revenue. The revenue fields are total revenue at each volume, so $50 per unit at 100 units goes in as 5,000.
  • Putting the same quantity in both quantity fields. With no change in quantity, marginal revenue is undefined and the tool returns nothing.
  • Confusing marginal revenue with price. Unless the price stays fixed no matter how much you sell, marginal revenue is lower than the price, because discounts apply to every unit.
  • Using revenue from different periods or currencies. The two revenue figures must be comparable, for example the same month before and after a price move.
  • Comparing a big jump in quantity as if it were one unit. The result is the average extra revenue per unit over the whole range, not the revenue of the last unit alone.

Sources

About this calculator

Marginal revenue is the change in total revenue that comes from selling one more unit: MR = ΔTotal Revenue ÷ ΔQuantity, calculated here from a before-and-after revenue and quantity pair. It's the revenue-side counterpart to marginal cost, and the two together define the classic MR = MC profit-maximizing output rule from microeconomics.

Economics students use this to work through textbook problems on firm behavior under different market structures, while business managers and pricing analysts use the same calculation on real sales data to judge whether pushing production or a promotion to sell one more unit is still worth it, or whether marginal revenue has already dropped below marginal cost.

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Comments (1)

  • Editorial team

    Pair this number with your cost per extra unit. With revenue of 1,000 at 100 units and 1,180 at 120, the marginal revenue is 9.00 per unit, so extra volume pays only while each added unit costs less than that. If the same discount lowers revenue to 950, it becomes -2.50: the price cut gave away more than the volume brought in. What cost per extra unit are you comparing against?

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