why did you take the per catalogie route

Question

For some one who doesnt know the industry / sector - would not be able to imagine per catalogue price. Why cant we simply take total reve / costs of total sales. It yields the same inferance.

Answer 1

Hello Vaibhav,

You are right, to address the problem you can consider the total revenues and costs. Anyway, in order to answer any additional question about the business, it's important to understand and split the different factors considering at least price per unit, volume, fixed costs and variable costs.
You can have a proof of this reading the other questions in the text.

Best,
Luca

Answer 2

Because looking at it from the macro level is too simple. You don't just need to see whether the business is profitable or not, but why. Is this a pricing issue, a quantity sold issue, or something else? Look at the Revenue Estimate Tree chart on the right.

The micro-level breakdown helps you understand the business, products etc. to a much better degree.