![]() This article will go deeper into how calculating marginal revenue will provide valuable insights for a business. Marginal revenue as a single calculation is simple enough to understand, but it is only one part of a larger picture outlining the financial well-being of a business’s output. Calculating marginal revenue is also particularly valuable if a business is trying to understand how high its costs are relative to output. Marginal revenue is most valuable for identifying the sales inflection point where costs begin to exceed your revenue, allowing managers to make informed decisions about the unit economics of production. The marginal revenue formula is: marginal revenue = change in total revenue/change in output. To calculate marginal revenue, you take the total change in revenue and then divide that by the change in the number of units sold. Critical Take-Aways for calculating marginal revenue.Doing a cost-benefit analysis for marginal revenue.Marginal revenue relative to a demand curve.Why is calculating marginal revenue necessary?. ![]()
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December 2022
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