For some reason having trouble figuring out question 4 ; maybe my brain is too tired, but help would be very much appreciated!
Amazing, thank you so much
For some reason having trouble figuring out question 4 ; maybe my brain is too tired, but help would be very much appreciated!
Hello!
Before putting the numbers, might help u to solve it "theoretically". Write both equations from both situations (revenue - fixed cost - variable cost) and outline which is the factor you are missing, since that is the answer you are looking for.
Hope it helps!
Cheers,
Clara
Hi,
Old situation:
-- 10M subscribers
-- 20$/month subscription fee
-- 1800$/year goods sold per subscriber
-- 3% commission for each transaction
-- 1B$ fixed cost
-- 110M$ variable cost per subscriber
--> this leads to a profit of 20$/month per subscriber
New situation:
-- 10M subscribers (same)
-- 10$/month subscription fee (change)
-- x$/year goods sold per subscriber (what we have to calculate)
-- 3% commission for each transaction (same)
-- 1B$ fixed cost (same)
-- 110M$ variable cost per subscriber (same)
--> Costs remain constant (no factor changed): C = 1B$ + 10M*110M$ = 2.1B$
--> To maintain the same profitability Revenue per customer should be the same: R_new = 12*10$ + x*3% = R_old = 12*20$ + 1800$*3% = 294$
--> x = (294$ - 120$) / 3% = 5800$
Hope it helps,
Antonello
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You're awesome, thank you!