Price elasticity

Price change and sales volume — what does your price increase achieve?

A price increase almost never leaves sales volume stable — the question is how much decline in volume is economically bearable. With the starting price, planned increase, sales volume and variable costs, the critical point at which the contribution margin remains the same can be calculated.

The rule of thumb: at a 30 % contribution margin and a 5 % price increase, sales volume may fall by up to 14 % without the total contribution margin dropping. If the margin is higher, the tolerance is greater still. That is the rational basis for pricing discussions.

In practice, the actual drop in sales volume from moderate price increases (3–8 %) in B2B is usually far smaller than the tolerance threshold — provided the increase is communicated with reasons and competitors follow suit. Profit then rises disproportionately.

Price change & sales volume
What does your price increase achieve?
Impact on revenue and profit – and the maximum tolerable decline in sales volume.
Change in result (contribution margin)
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All values are indicative, based on your inputs and standard market assumptions — not legal, tax or investment advice. Industry factors are for orientation only and do not replace an individual analysis.