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Marginal Revenue: Definition, examples and tips for beginners 📈
What is Marginal Revenue?
Marginal revenue is the extra money you earn when you sell one more product or service. It helps you figure out how much each additional sale adds to your total income.
How to calculate Marginal Revenue
Marginal Revenue = Change in Total Revenue​ ➗ Change in Total Revenue​
If your total revenue increases from $500 to $600 when you sell one more item, your marginal revenue is:
Change in revenue = 600 - 500 = 100
Change in quantity sold = 1
Marginal Revenue = 100​ ➗ 1 = 100​
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This means selling one more product earns you an extra $100.
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