A price increase can change volume. Model both.
A higher price does not translate directly into the same percentage increase in profit. Some customers may buy less, unit costs may change, and the effect can differ by channel or product.
Worked example — synthetic numbers
| Monthly measure | Baseline | Scenario |
|---|---|---|
| Revenue | ₹20,00,000 | ₹20,18,800 |
| Cost of goods | ₹12,00,000 | ₹11,76,000 |
| Operating expenses | ₹7,00,000 | ₹7,00,000 |
| Operating profit | ₹1,00,000 | ₹1,42,800 |
Assumptions: price rises 3%, volume falls 2%, unit costs and operating expenses stay unchanged. Revenue = ₹20,00,000 × 1.03 × 0.98. Cost of goods = ₹12,00,000 × 0.98. The resulting monthly operating profit change is ₹42,800.
What the calculation does not prove
It does not predict the actual volume response. It excludes taxes, financing, implementation costs and changes in product mix. Run low, central and high volume-loss scenarios before deciding.
Test before expanding
Choose a small product or customer segment. Record units, realised price, returns, contribution and repeat orders. Set a review date and a stop condition before changing the price.