Marginal Revenue Calculator
Marginal revenue is what the next unit sold adds to total revenue — and when you must cut price to sell more, MR falls below the price. Enter revenue and quantity before and after a change:
MR = ΔTR ÷ ΔQ. If revenue rises from $10,000 (100 units) to $10,780 (110 units), marginal revenue is $78/unit — below the $98 average price, because the price cut applies to every unit.
- FormulaΔTR ÷ ΔQ
- Example$780 ÷ 10 = $78/unit
- Perfect competitionMR = price
- Profit ruleExpand while MR > marginal cost
Pairs with our marginal cost calculator: profit peaks where the two meet.
Why MR sits below price for most firms
To sell unit #101 you drop the price a little — and that lower price applies to all 101 units, not just the new one. So the new unit’s net contribution is its price minus the revenue given up on the rest. Only a price-taker in a perfectly competitive market keeps MR = price. The steeper your demand curve, the faster MR falls — and when MR hits zero, more volume literally reduces revenue.
The profit-maximizing rule: keep expanding output while MR exceeds marginal cost, stop where they’re equal. Every pricing consultant’s deck is this sentence with nicer fonts.
Frequently asked questions
How do you calculate marginal revenue?
Divide the change in total revenue by the change in quantity: MR = ΔTR ÷ ΔQ. Selling 10 more units for $780 more revenue means MR = $78.
Why is marginal revenue less than price?
Because selling more usually requires a lower price on every unit, the extra unit's gain is offset by revenue lost across existing volume.
What does negative marginal revenue mean?
The price cut needed for extra volume costs more than the volume brings in — total revenue falls as you sell more. You're on the wrong side of the demand curve.
What's the link to marginal cost?
Profit is maximized where MR = MC. If MR ($78) exceeds MC ($50), expand; if MC exceeds MR, cut back.
Sources & methodology
Sources: NumberBench methodology.
Results update as you type and are general estimates, not financial advice.