What is price elasticity and what number should I use?

Price elasticity here is how many percent of customers you lose for each 1% price increase. A value of 1.0 means a 10% price rise loses about 10% of customers (unit elastic). Sticky B2B products with switching costs are often 0.3–0.7 (inelastic); commodity or easily-substituted products can be 1.5+ (elastic). If unsure, start at 1.0 and test a range.

How do you find the profit-maximizing price?

The tool applies your elasticity to each price change, recomputes customers, revenue, and gross profit (variable cost per customer held fixed), and highlights the price that produces the highest gross profit. Because cost per customer is roughly fixed, the profit-maximizing price is usually higher than the revenue-maximizing price.

Why does gross margin improve when I raise prices?

The calculator derives your variable cost per customer from your current margin and holds it fixed in dollars. When price rises, that fixed cost is a smaller share of the new price, so gross margin percentage widens. This is realistic for software and most subscription businesses where cost to serve does not scale with price.

What is the break-even loss figure?

It is the percentage of customers you could lose at the new, higher price and still keep the same total MRR you have today. A large break-even cushion means a price increase is low-risk even if churn is worse than your elasticity assumption.

Is a higher price always better?

No. Past a point, elasticity-driven customer loss outweighs the higher price and both revenue and profit fall. Raising prices can also slow new-customer acquisition (not modeled here) and strain retention. Use the optimal-price row as a starting hypothesis, then test with a real cohort.

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Pricing Sensitivity Calculator

What happens to MRR, gross profit, and unit economics if you change your price? Model it in seconds — with price elasticity, the profit-maximizing price, and how many customers you could afford to lose.

Your numbers

Monthly price

Customers

Gross margin$25/cust cost

Monthly churn

CAC

Price elasticity% lost per +1% price

MRR

$19,800

ARR

$237,600

Gross profit / mo

$14,850

75% margin

LTV

$2,475

contribution

LTV : CAC

6.2x

CAC payback

5.4 mo

Raising price 10% to $109/mo maximizes gross profit — -$198 MRR vs today.

At a +10% price you could lose up to 9%of customers and still hold today's MRR.

MRR & gross profit by price change

Price change	New price	Customers	MRR	Gross profit	LTV:CAC	Payback	Break-even loss
-30%	$69	230	$15.9K	$10.2K	4.3x	7.7 mo	0%
-20%	$79	220	$17.4K	$12.0K	5.0x	6.7 mo	0%
-10%	$89	210	$18.7K	$13.5K	5.6x	6.0 mo	0%
-5%	$94	205	$19.3K	$14.2K	5.9x	5.7 mo	0%
0%now	$99	200	$19.8K	$14.8K	6.2x	5.4 mo	0%
+5%	$104	190	$19.8K	$15.0K	6.5x	5.1 mo	5%
+10%optimal	$109	180	$19.6K	$15.1K	6.8x	4.9 mo	9%
+15%	$114	170	$19.4K	$15.1K	7.1x	4.7 mo	13%
+20%	$119	160	$19.0K	$15.0K	7.4x	4.5 mo	17%
+30%	$129	140	$18.0K	$14.6K	8.0x	4.1 mo	23%
+50%	$149	100	$14.8K	$12.4K	9.3x	3.6 mo	33%

Variable cost per customer is derived from your gross margin at the base price and held fixed as price changes, so margin widens on increases. Elasticity assumes price increases cost customers in full while discounts win them back at half the rate.

Pressure-test your pricing with a CFO

This is a model, not a mandate. Book a free 30-minute call and we'll sanity-check your elasticity assumptions, margins, and the price move that actually fits your stage.

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Frequently Asked Questions

What is price elasticity and what number should I use?: Price elasticity here is how many percent of customers you lose for each 1% price increase. A value of 1.0 means a 10% price rise loses about 10% of customers. Sticky B2B products are often 0.3–0.7 (inelastic); commodity products can be 1.5+ (elastic). If unsure, start at 1.0 and test a range.
How do you find the profit-maximizing price?: The tool applies your elasticity to each price change, recomputes customers and gross profit (variable cost per customer held fixed), and highlights the price with the highest gross profit. Because cost per customer is roughly fixed, the profit-maximizing price is usually higher than the revenue-maximizing price.
What is the break-even loss figure?: It is the percentage of customers you could lose at the new, higher price and still keep the same total MRR you have today. A large cushion means a price increase is low-risk even if churn is worse than your assumption.

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