I am calculating the price elasticity as a starting point to find a theoretical optimal price that would maximize our revenue.
I am looking at 2 years data and to use the price elasticity formula, I am considering monthly values separately (this also because given the strong seasonality we have, i would expect different elasticity per month and I would like to suggest different prices every month).
To get the monthly Price Elasticity, I calculate for each month Prices and Quantities of the respective year:
$$ \frac{(Q^{2018} - Q^{2017})/Q^{2017}}{(P^{2018} - P^{2017})/P^{2017}} $$
Question 1: Is this correct? Using aggregated monthly data is enough? What if I had also 2016 data? How could I put this extra information in the formula?
Question 2: Could I use daily data to calculate the price elasticity? Could I plot 2 years data and use the linear trend line for the elasticity calculation?
Thanks in advance, any help is highly appreciated!