Hello, I am struggling to figure out the answer to this question from BCG Online Case library:
By what percentage does the client need to increase the average ticket price to maintain its profits?
You are given the following information:
- Sales: $1,500 millions
- Profit margin: 20%
- Expected fuel price increase: 50%
- Current fuel costs are half as high as non fuel costs
We are looking the percentage increase of the revenue that will keep our 20% margin.
Old cost= 800 (Non fuel cost) +400 (Fuel cost) = 1200
New cost=800 + 600 = 1400
Therefore the new equation should be:
I would need some help figure out what is wrong in my equation.
The answer is supposed to be 13.3%
Thanks a lot for your help