Margin · free tool · no email

What does a 1% price increase do to our EBITDA?

A price increase falls almost entirely to the bottom line, because the cost of the goods does not change. This sizes a 1% increase and lets you hold back a share of it for discounts or concessions you expect to give. If you expect to lose volume, use the discount break-even tool, which handles cost correctly.

Your assumptions

Worked-example values — replace with yours

Annual revenue· per year

Current EBITDA margin· per year

% of revenue

Share of the increase you expect to give back in discounts or concessions· per year

% of the gain

Price concessions only. Lost volume is a different effect (it also removes cost) — see the discount break-even tool.

1% price → EBITDA · Estimated

$350,000

EBITDA gain from a 1% price increase, per year

EBITDA lift: 5.8%of today's EBITDA

Moderate leverage. Still meaningful, but your EBITDA margin softens the effect. Worth pairing price work with leakage recovery.

Assumes volume and unit cost do not change.

This is an estimate. Check it on your own data.

Whether a 1% increase sticks depends on your price waterfall, your contracts and your competitive position. The free Margin Scan benchmarks your pricing maturity and shows where realisable points sit.

Check it on my data →

Your inputs travel with you into the request, or into the free Margin Scan. Nothing is sent to ADEXMA until you submit a form.

The formula

gain = revenue × 1% × (1 − share given back)
EBITDA lift (%) = gain ÷ (revenue × EBITDA margin)

Worked example · the values pre-filled above

Annual revenue: $50,000,000 · Current EBITDA margin: 12 % of revenue · Share of the increase you expect to give back in discounts or concessions: 30 % of the gain

1% of $50,000,000 revenue = $500,000.
Give back 30% of it: $500,000 × (1 − 0.30) = $350,000 a year.
EBITDA today = $50,000,000 × 12% = $6,000,000, so the lift is $350,000 ÷ $6,000,000 = 5.8%.

Result: $350,000 a year · 5.8% lift

What this assumes

Volume does not change. If it might, use the discount break-even tool: lost volume removes cost as well as revenue.
Unit cost does not change.
The “given back” share covers discounts, rebates and concessions on the same sales.
It is an estimate from your own inputs. Results from different tools overlap and must never be added together into one savings figure.

Sources

Marn, M. & Rosiello, R., “Managing Price, Gaining Profit”, Harvard Business Review, Sept–Oct 1992 — The leverage of price on operating profit.
Nagle, T., Hogan, J. & Zale, J., The Strategy and Tactics of Pricing (Routledge, 6th ed.) — Why price changes fall to profit; contribution view of volume trade-offs.
ADEXMA Calculation Catalog · ROI-002 · part of Margin Architecture™.

Questions people ask

What does a 1% price increase do to EBITDA?

With no volume or cost change, it adds 1% of revenue to EBITDA. On $50M revenue and a 12% EBITDA margin, that is $500,000, or 8.3% of EBITDA before any give-back.

Why not just assume volume holds?

You can, and the tool does. But if you expect to lose volume, a pass-through percentage is the wrong model, because lost volume also removes its cost. Use the discount break-even tool for that case.

MarginDiscount break-evenCan we afford this discount? How many more units must we sell to break even?MarginPocket-price leakageHow much of our list price do we actually keep after discounts, rebates and freight?

On your own data, Margot picks up this finding in a workspace and your advisor confirms it. See what each plan adds →