What marginal revenue is
Marginal revenue is the income from one more unit sold. It looks at the change, not the total. You enter the change in revenue. You also enter the change in quantity. The tool divides one by the other. The result is per extra unit. It answers what the next unit earns.
Why marginal revenue matters
It shows what the next sale really adds. A firm uses it to set output. If marginal revenue beats marginal cost, make more. If not, making more loses money. The figure guides smart pricing and volume. It turns a gut call into a number.
How to use this calculator
Enter two values. Put in the change in revenue. Then enter the change in quantity sold. The tool divides revenue by quantity. You read the marginal revenue per unit. Change either figure and it updates.
How it is calculated
The math is one division. Marginal revenue = change in revenue / change in quantity. You split the extra revenue across the extra units. The answer is the income per added unit. It sits in your currency. You can check the math in your head.
A worked example
Say revenue rose by five thousand. Quantity rose by two hundred units. Divide five thousand by two hundred. The marginal revenue is twenty five. That is what each extra unit brought in. Selling more added that much per unit.
Reading the result
The figure is income per extra unit. Set it next to your marginal cost. A gap above cost means profit on more. A gap below means a loss. The two together guide output. Make more only while revenue wins.
Marginal revenue and pricing
In a competitive market, price equals marginal revenue. With pricing power, the two can differ. Cutting price to sell more lowers it. Marginal revenue can even turn negative. Watch it as you change your price. A negative figure means the cut hurt.
Common mistakes to avoid
One slip is using total revenue, not the change. Another is mismatching the periods. People also mix up units of quantity. Each error skews the figure. Use matched changes for a true result. Match the same window for both inputs.
The limits of this tool
This calculator uses one pair of changes. It assumes a steady rate across them. It ignores costs and capacity limits. It also smooths over uneven demand. Use it as a quick guide. Pair it with real cost data.
Using marginal revenue to decide
Compare the figure to your marginal cost. Make more while revenue beats cost. Stop when they meet, the profit peak. Test a few changes to find the line. Let the numbers steer the volume. Stop short of selling at a loss.
A final tip
Recompute it as your sales shift. The figure moves with price and demand. Compare a few points to see the trend. A clear number keeps output on target. Recheck it whenever price moves.