wikiHow Maximum Revenue Calculator To calculate the maximum revenue, you will need to know the price and quantity of goods or services sold, as well as the total cost of producing and selling those goods or services. The maximum revenue is achieved when the quantity of goods or services sold generates the highest revenue, which is when the marginal revenue equals the marginal cost. Here are the steps to calculate maximum revenue: 1. Determine the price of your product or service, which is the amount you charge per unit sold. 2. Determine the quantity of your product or service that you expect to sell. 3. Calculate the total revenue by multiplying the price by the quantity sold. 4. Total revenue = Price x Quantity sold 5. Determine the total cost of producing and selling the product or service. This includes all costs such as materials, labor, and overhead expenses. 6. Calculate the marginal revenue by finding the change in total revenue resulting from a one-unit increase in quantity sold. 7. Marginal revenue = Change in total revenue / Change in quantity sold 8. Calculate the marginal cost by finding the change in total cost resulting from a one-unit increase in quantity sold. 9. Marginal cost = Change in total cost / Change in quantity sold 10. Determine the quantity of goods or services where the marginal revenue equals the marginal cost, which is the point of maximum revenue. 11. Calculate the maximum revenue by multiplying the price by the quantity of goods or services sold at the point of maximum revenue. Note that the point of maximum revenue is not necessarily the point of maximum profit, as profit also depends on the cost of producing and selling the product or service. Let's say you are selling homemade cakes and you have determined that your price per cake is $20. You estimate that you can sell 100 cakes in a month. The total cost of producing and selling 100 cakes is $1,500. To calculate the total revenue, you multiply the price per cake by the quantity sold: Total revenue = Price x Quantity sold = $20 x 100 = $2,000 Next, you need to determine the marginal revenue and marginal cost. Suppose that if you sell one more cake, your total revenue will increase by $15 and your total cost will increase by $10. Marginal revenue = Change in total revenue / Change in quantity sold = $15 / 1 = $15 Marginal cost = Change in total cost / Change in quantity sold = $10 / 1 = $10 To find the point of maximum revenue, you need to find where the marginal revenue equals the marginal cost. In this case, the point of maximum revenue occurs when you sell 100 cakes, as any additional cakes sold will result in a lower marginal revenue than marginal cost. Finally, to calculate the maximum revenue, you multiply the price per cake by the quantity sold at the point of maximum revenue: Maximum revenue = Price x Quantity sold at point of maximum revenue = $20 x 100 = $2,000 Therefore, in this example, the maximum revenue is $2,000 per month when you sell 100 cakes at a price of $20 per cake. Page