Free marginal revenue calculator
Find the revenue from selling one more unit in two seconds. Enter two revenue levels — or the change in revenue and change in quantity directly — and the calculator returns the marginal revenue per unit (ΔTR ÷ ΔQ), the change in total revenue, and the change in quantity, ready to compare against marginal cost — updated live, as you type.
On this page15 sections
Estimates only, based on the values you enter. Not financial or accounting advice.
Results are estimates. Consult a professional.
What is marginal revenue?
Marginal revenue is the extra revenue a business earns from selling one more unit — the change in total revenue when sales rise by a single unit. It answers the question that sits behind every pricing and output decision: what does the next sale actually add to the top line? Because selling more often means cutting the price to move the extra units, the revenue from the next unit is rarely the same as its sticker price. It is the number this marginal revenue calculator returns the moment you enter a change in total revenue and a change in quantity.
In economics, marginal revenue is the slope of the total-revenue curve — the rate at which total revenue climbs as you sell more. Total revenue is measured in dollars; marginal revenue is measured in dollars per unit. That single distinction is why a company can grow total revenue while the revenue from each additional unit is steadily shrinking.
The marginal revenue formula
The marginal revenue formula has just two inputs, and the calculator above accepts them either way you have the data: as two sales points (a before and an after) or as the changes directly.
- Change in total revenue (ΔTR) — total revenue at the higher sales level minus total revenue at the lower level. Total revenue at each point is simply the selling price multiplied by the quantity sold.
- Change in quantity (ΔQ) — units sold at the higher level minus units at the lower level. Often this is one unit, but it is just as valid to measure the revenue from the next batch of 10, 100, or 1,000.
How to calculate marginal revenue
Calculating marginal revenue is a three-step process — the same one the calculator runs live as you type.
- Find the change in total revenue. Work out total revenue (price × quantity) at each sales level, then subtract the lower from the higher. If a price cut is what lifted volume, the after figure uses the new, lower price across all units.
- Find the change in quantity. Subtract the starting number of units sold from the new number. This is how many extra units the added revenue came from.
- Divide revenue by quantity. Marginal revenue = change in total revenue ÷ change in quantity. The result is the revenue earned by each additional unit across that range of sales.
A worked example using the marginal revenue calculator
A novelty company currently sells 1,000 Magic 8 Balls for a total revenue of $50,000. After a promotion, sales rise to 1,200 units for a total revenue of $62,000. Management wants the marginal revenue of those extra units before planning the next production run. Here is how they use the calculator.
Step 1 — Find the change in total revenue
They enter the two total-revenue figures. The extra sales brought in $62,000 − $50,000 = $12,000 in additional total revenue.
| Sales level | Total revenue |
|---|---|
| Before — 1,000 units | $50,000 |
| After — 1,200 units | $62,000 |
| Change in total revenue (ΔTR) | $12,000 |
Step 1 result: total revenue rose by $12,000.
Step 2 — Find the change in quantity
Sales went from 1,000 to 1,200 units, so the change in quantity is 200 extra units.
| Sales level | Quantity |
|---|---|
| Before | 1,000 units |
| After | 1,200 units |
| Change in quantity (ΔQ) | 200 units |
Step 2 result: 200 additional units sold.
Step 3 — Divide revenue by quantity
Now see what to do with the number. If the marginal cost of making each of those extra Magic 8 Balls is below $60, the expansion adds profit; if it costs more than $60 to make the next one, every extra unit shrinks profit and they should hold output where it is. That comparison — marginal revenue against marginal cost — is the heart of the output decision, covered in the sections below.
Marginal revenue = marginal cost: the profit-maximising rule
The single most important use of marginal revenue is deciding how much to produce and sell. A profit-maximising firm keeps selling as long as the revenue from the next unit (its marginal revenue) is at least as large as the cost of that unit (its marginal cost). It stops at the output where the two are equal.
The intuition is simple. If the next unit earns more than it costs to make, selling it adds profit — so make it. Once the next unit costs more than it earns, each one shrinks profit, so you have gone too far. Marginal revenue = marginal cost is the precise output level that captures every profitable unit and no loss-making ones. This is the revenue-side mirror of the marginal cost decision: pair the two calculators to find the exact quantity where MR and MC meet.
Marginal revenue vs. total revenue and average revenue
Marginal revenue, total revenue, and average revenue are constantly confused, yet they answer different questions. Total revenue is all the money coming in; average revenue is revenue per unit (which equals the price); marginal revenue is the revenue from just the next unit.
| Marginal revenue | Average revenue | Total revenue | |
|---|---|---|---|
| Question it answers | What does the next unit add? | What does a typical unit earn? | How much comes in overall? |
| Formula | ΔTR ÷ ΔQ | total revenue ÷ quantity (= price) | price × quantity |
| Measured in | $ per unit | $ per unit | $ |
| Used for | Output and pricing decisions | Comparing the price received | Top-line size of the business |
Marginal revenue drives the decision to sell more; total revenue measures the whole business.
Marginal revenue under perfect competition vs. monopoly
How marginal revenue behaves depends entirely on the kind of market a firm sells in. This is the part most quick calculators skip, yet it is what makes marginal revenue worth understanding — the same formula gives a flat line in one market and a falling line in another.
Perfect competition — marginal revenue equals the price
In a perfectly competitive market, a single firm is a price taker: it is so small relative to the market that it can sell as many units as it likes at the going price without moving that price. So every extra unit brings in exactly the market price. Marginal revenue is constant, it equals average revenue, and it equals the price — the marginal revenue curve is a horizontal line. This is why, for a competitive firm, the profit rule simplifies to produce until marginal cost equals price.
Monopoly — marginal revenue falls below the price
A monopolist (or any firm with pricing power) faces the whole downward-sloping market demand curve. To sell one more unit it must lower the price — and usually on every unit it sells, not just the last one. So the marginal revenue from the next unit is the new price minus the revenue given up by discounting all the earlier units. Marginal revenue therefore falls faster than price and sits below it: the marginal revenue curve slopes down and lies under the demand curve. This is the reason a price-setting firm holds output below the competitive level.
Why marginal revenue decreases (the marginal revenue curve)
For any firm with pricing power, plot marginal revenue against quantity and you get a downward-sloping line that falls faster than the demand curve — and can even turn negative. Understanding why explains a great deal about pricing.
Each extra unit has two opposing effects on revenue. The output effect adds revenue — you sold one more unit. The price effect subtracts revenue — to sell that unit you cut the price, and the lower price applies to the units you could have sold for more. Early on the output effect dominates and marginal revenue is positive but shrinking. Push far enough and the price effect overwhelms the output effect: marginal revenue turns negative, meaning extra sales actually lower total revenue. A profit-maximising firm never produces in that negative-marginal-revenue range.
How to use marginal revenue in pricing and output decisions
Marginal revenue is not just a textbook curve — it is a working tool for setting price and volume. Four ways businesses put it to use:
- Set output where MR equals MC. Keep selling additional units while marginal revenue exceeds marginal cost; stop at the quantity where they meet. That point captures the most profit available.
- Decide on a price cut or promotion. Estimate the extra units a lower price would move and the revenue it adds — if marginal revenue stays above marginal cost, the promotion pays; if not, it erodes profit.
- Evaluate a large order or new channel. A bulk order at a discount can still be worth taking if its marginal revenue clears the marginal cost of fulfilling it, even when the price is below your list price.
- Avoid the negative-marginal-revenue zone. Selling more is not always better. Once marginal revenue turns negative, extra volume lowers total revenue — a signal to raise price rather than chase units.
Pair this calculator with a marginal cost calculation and a break-even analysis to turn a marginal revenue figure into a concrete pricing and volume plan, then check the result against your profit margin.
Definitions and methodology
This tool applies the standard microeconomic definition of marginal revenue: the change in total revenue divided by the change in quantity (ΔTR ÷ ΔQ), equivalent to the first derivative of the total-revenue function with respect to quantity. The formula, the marginal-revenue-equals-marginal-cost profit rule, and the perfect-competition-versus-monopoly treatment follow standard microeconomics and managerial-economics texts.
Marginal revenue — definition, formula, and curves (Wikipedia).Frequently asked questions about the free marginal revenue calculator
About this marginal revenue calculator
This marginal revenue calculator runs entirely in your browser. Every figure you enter stays on your device — nothing is sent to a server, logged, or shared. It applies the standard formula marginal revenue = change in total revenue ÷ change in quantity (ΔTR ÷ ΔQ), accepting either two revenue levels or the changes directly, and updates instantly as you type.
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