Free Marginal Revenue Calculator
Calculate marginal revenue using changes in total revenue and quantity sold, prices and sales volumes, or a linear demand equation.
Results are expressed in US dollars. Marginal revenue measures additional revenue per additional unit sold. It is not profit.
Your Results
Your calculation details will appear here.
Enter values and click Calculate.
A positive marginal revenue means revenue increases with additional sales. A negative value means total revenue falls as quantity increases over the measured interval.
How to Use the Marginal Revenue Calculator
This calculator measures the change in total revenue associated with selling additional units of a product or service.
Step 1: Select a Calculation Mode
Choose Total Revenue if you already know the revenue generated at two different sales quantities.
Choose Price and Quantity if you know the selling prices and units sold. The calculator will determine total revenue automatically.
Choose Linear Demand if you have a demand equation in the form P = a – bQ.
Step 2: Enter Your Values
Provide the required revenue, price, quantity, or demand equation information.
For the first two modes, the new quantity must be greater than the initial quantity. This ensures the result measures additional revenue per additional unit.
Step 3: Click Calculate
The calculator displays marginal revenue, the relevant revenue information, and a detailed formula breakdown.
Step 4: Review the Result
Positive marginal revenue indicates that additional sales increase total revenue.
Negative marginal revenue indicates that the additional sales reduce total revenue over the measured interval.
Marginal revenue alone cannot determine whether additional sales increase profit. You must also consider marginal cost.
Marginal Revenue Formula
Marginal revenue measures the additional revenue a business earns when it sells more units.
The standard discrete formula is:
Marginal Revenue = Change in Total Revenue ÷ Change in Quantity
Or:
MR = (TR₂ – TR₁) ÷ (Q₂ – Q₁)
Where:
- MR = Marginal revenue
- TR₁ = Initial total revenue
- TR₂ = New total revenue
- Q₁ = Initial quantity sold
- Q₂ = New quantity sold
Calculate Total Revenue
When price is the same for every unit at a given sales level:
Total Revenue = Selling Price × Quantity Sold
Calculate total revenue at both sales levels before dividing the revenue change by the quantity change.
Marginal Revenue from Linear Demand
Suppose the inverse demand equation is:
P = a – bQ
Total revenue is:
TR = P × Q = aQ – bQ²
Taking the derivative with respect to quantity gives:
MR = a – 2bQ
This is instantaneous marginal revenue.
For one additional whole unit, the exact discrete revenue change is:
TR(Q + 1) – TR(Q) = a – b(2Q + 1)
These values differ because one describes an instantaneous rate and the other describes a one-unit change.
Marginal Revenue Calculation Example
Suppose a business increases sales from 100 units to 120 units.
Its total revenue increases from $1,000 to $1,500.
Step 1: Calculate Revenue Change
$1,500 – $1,000 = $500
Step 2: Calculate Quantity Change
120 – 100 = 20 units
Step 3: Calculate Marginal Revenue
MR = $500 ÷ 20 = $25 per unit
Final Result
The business earns an average of $25 in additional revenue for each additional unit across this 20-unit sales increase.
This is the average marginal revenue over the interval, not necessarily the revenue from the next individual unit.
Marginal Revenue Example Table
The following table illustrates a linear demand equation:
P = 100 – 0.5Q
| Quantity | Price | Total Revenue | Instantaneous MR |
|---|---|---|---|
| 0 | $100 | $0 | $100 |
| 20 | $90 | $1,800 | $80 |
| 40 | $80 | $3,200 | $60 |
| 60 | $70 | $4,200 | $40 |
| 80 | $60 | $4,800 | $20 |
The marginal revenue column uses MR = 100 – Q. It is the derivative of total revenue at each listed quantity, not the average revenue change between table rows.
Frequently Asked Questions
What is marginal revenue?
Marginal revenue measures the additional revenue generated by increasing sales quantity. It is commonly expressed as revenue per additional unit.
How do you calculate marginal revenue?
Subtract initial total revenue from new total revenue. Divide that result by the increase in quantity sold.
Can marginal revenue be negative?
Yes. Marginal revenue becomes negative when increasing quantity reduces total revenue. This can occur when lower prices apply to all units sold.
Is marginal revenue the same as profit?
No. Marginal revenue measures additional revenue. Marginal profit also depends on the additional cost of production or sales.
What is the difference between marginal revenue and average revenue?
Average revenue equals total revenue divided by quantity sold.
Marginal revenue measures the change in total revenue associated with a change in quantity.
Can marginal revenue equal the selling price?
Yes. If each additional unit sells at the same price without affecting revenue from existing units, marginal revenue equals that price.
Why is marginal revenue important?
Businesses use marginal revenue to evaluate the revenue effect of producing or selling additional units.
Comparing marginal revenue with marginal cost can help analyze production decisions.
What happens when marginal revenue is zero?
Zero marginal revenue means an additional change in output produces no additional total revenue over the relevant interval, or an instantaneous revenue function has a zero slope at that quantity.
How is marginal revenue calculated from a demand equation?
For a linear inverse demand equation P = a – bQ, total revenue is TR = aQ – bQ².
Differentiate total revenue to obtain MR = a – 2bQ.
Can marginal revenue help determine output levels?
Yes. Comparing marginal revenue with marginal cost is a standard part of profit-maximization analysis.
The result depends on the business’s cost structure, demand conditions, and other relevant constraints.