3 new calculators that will help you run your business
How to run a company? For many, the art of entrepreneurship requires that little bit of luck.
Meeting somebody influential who will help the growth of your company, finding your niche or, if you’re unlucky, problems with contractors or storage. It all can determine your fate.
Luck helps and can be the missing factor for many entrepreneurs, but all entrepreneurs should help lady luck. Not many can say they had success without being patient, frugal and rational. Intuition can only take you so far, but with data-driven and factual management you can go a long way.
In October, Omni Calculator has created tools that will help entrepreneurs run their businesses. Or students that want some help with learning microeconomics. Either way, feel free to do some math in our shiny new calculators.
Price Elasticity of Demand Calculator
It’s a tool for those that need to find out the perfect price for the products they sell. Price elasticity of demand measures the changing behavior of customers after changing price. In many branches, when prices soar, producers start to sell fewer products. Likewise, if the prices go down, there’s a bigger demand for products.
With this Price Elasticity of Demand Calculator you can measure the effect. Just type the initial price and quantity sold and what happened after the price changed. Then, you find out the elasticity.
Thanks to this calculator, you will be able to decide whether you should charge more for your product (and sell a smaller quantity) or decrease the price, but increase the demand.
What you are actually thinking about is the price elasticity of demand. It describes the behavior of customers once the price has been changed.
High price elasticity of demand elasticity (bigger than 1) means that price and demand are highly correlated and lowering prices is profitable. It happens with luxury products. Remember those lines of people wanting to buy a discounted TV on Black Friday? It’s an effect of high elasticity.
Conversely, low elasticity (close to 0) means that any price decrease has only a slight increase in demand. The same goes with increasing prices. Low elasticity products are those essential like salt or fuel or those that people are addicted to (alcohol, cigarettes).
Optimal Price Calculator
Optimal price is the effect of price elasticity. If you know how the behavior of your customers changes after you changed the prices of your products, then we can use that to calculate what’s the best price. Simple.
Aside from providing the same numbers as in the Price Elasticity of Demand Calculator, we also ask you to type marginal costs of producing one item of your product in our Optimal Price Calculator. In optimal price, marginal costs are the same as marginal revenue, so it has to be the same by default.
Type those numbers and you get your optimal price and quantity of products you want to sell.
Cross Price Elasticity Calculator
It’s a tool that helps you find out if the goods are substitute or complementary. To help illustrate this, let’s take an example. Video game producer makes a game and a series of add-ons that enhances the gaming experience. Once he lowers the price of the initial game, the demand for add-ons should increase.
Those are complementary goods. Substitute goods are like butter and margarine. If the price of butter soars, more people turn to margarine.
How to measure it? We use a formula to calculate the cross price elasticity. If it’s positive, then products are substitute. But if the cross price elasticity is negative, then goods are complimentary.
Try using our Cross Price Elasticity Calculator.