So, how do we know how much extra money we make when we sell one more item? That’s where a Marginal Revenue Calculator helps.
Marginal means extra or *additional. Revenue means money you get from selling. Put together, marginal revenue shows the money a business earns from selling one extra unit of a product or service. It helps us see if selling more items adds profit or not.
Using a Marginal Revenue Calculator saves time and helps in setting the right price. It is simple. You just enter total revenue and quantity at two different points, and it shows how much each new sale adds to your earnings.
When to Calculate Marginal Revenue (With Real-Life Example)
Let’s take an instructor who teaches software coding. He sells short online courses. Suppose at first, he sells 100 courses and earns $2,000 in total. Then he offers a small discount to attract more students and sells 120 courses, earning $2,220.
Now the learners ask him, “Sir, how do you find if those extra 20 sales really help your total earnings?”
He smiles and says, “Easy. I will show you step by step.”
Step-by-Step Calculation
Step 1 – Know the formula:
Marginal Revenue (MR) = (Change in Total Revenue) ÷ (Change in Quantity Sold)
Step 2 – Put the values:
Change in Revenue = 2,220 – 2,000 = 220
Change in Quantity = 120 – 100 = 20
Step 3 – Apply the formula:
MR = 220 ÷ 20
MR = $11 per course
The instructor writes on board, “Every extra course adds $11.”
He explains, “If I sell more at this rate, I add $11 each time.”
Step 4 – Think smart:
If the marginal revenue starts to fall, he knows the discount may not be helping anymore. That’s how he adjusts his price strategy.
A simple trick for manual calculation:
Take two points — your old total revenue and new total revenue, then divide the difference by how many extra items you sell. Done.
But when you work with large sales data, a Marginal Revenue Calculator makes it easier. It gives instant results and helps in planning better pricing and profit decisions.
FAQs
Q1: What does a Marginal Revenue Calculator do?
It shows how much extra money you make from selling one more unit.
Q2: Why is marginal revenue important?
It helps you see when selling more starts to reduce your profit.
Q3: Who can use it?
Teachers, engineers, sales teams, freelancers — anyone who sells products or services.