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Finance Calc Kit
Business

Marginal Revenue Calculator

Calculate marginal revenue from initial and final revenue and quantities, change in revenue and quantity, or price and elasticity components.

Revenue and quantity

$
$
units
units

Marginal revenue (MR)

$26.67 / unit

Additional revenue per additional unit sold

Change in revenue (ΔTR)

$800.00

Change in quantity (ΔQ)

30 units

Initial avg price (P₁)

$20.00 / unit

Final avg price (P₂)

$21.54 / unit

Calculation

Open to see each step from your inputs to the result.

Report tool

What marginal revenue tells you about pricing and output

Marginal revenue (MR) is the additional total revenue earned when one more unit is sold. It differs from average price because selling extra units often requires lowering price or changing product mix. Profit-maximizing firms produce where MR equals marginal cost.

Enter two sales levels (initial and final revenue and quantity) or input direct changes in revenue and quantity. Compare results with the marginal cost calculator to find profit-maximizing output, or use the Lerner index calculator to measure pricing power relative to marginal cost. To total gross and net sales from unit price and volume, use the revenue calculator.

Marginal revenue formula

MR=ΔTRΔQ\mathrm{MR} = \frac{\Delta TR}{\Delta Q}

ΔTR is the change in total revenue between two quantity levels. ΔQ is the change in units sold. MR can be positive, zero, or negative depending on demand elasticity and pricing strategy.

Worked example

Revenue rises from $2,000 at 100 units to $2,800 at 130 units. ΔTR = $800 and ΔQ = 30, so MR = $26.67 per unit. Initial average price was $20.00 and final average price was $21.54, showing that MR can differ from either average when price changes along the demand curve.

Frequently asked questions

When is marginal revenue equal to price?
Under perfect competition, each firm is a price taker and MR equals the market price. With market power, selling more units typically requires a lower price, so MR falls below price.
Can marginal revenue be negative?
Yes. If cutting price to sell more units reduces total revenue, MR is negative. This happens in the inelastic portion of a linear demand curve.
How does MR relate to profit maximization?
A firm maximizes profit where MR = MC. If MR exceeds MC, producing another unit adds profit. If MR is below MC, reducing output raises profit.
What is the difference between MR and average revenue?
Average revenue is total revenue divided by quantity, which equals price for a single-product firm. MR measures the incremental revenue from the last unit sold.

Resources and references

The formulas and methods in this calculator were checked against these independent sources.