Hey guys,
I have a question regarding the quant part of a case question.
The overall question was to find a price for the ticket of a concert. In order to determine the price, it was necessary to calculate the cost but I dont really understand where the margin come from (35.220). Is there something I missed in my thinking process? Happy to hear from you.
Kind regards
Thank you very much. I thought that cost based pricing is defined as cost + mark up. Why they subtract the revenue from that sum after that?
Think of it this way: Start with the standard profit formula -> Profit = Rev - Cost (whereby 2/3 revenue streams are known i.e. hotel + sponsoring -> ticket price is unknown and becomes an X). Then you plug in the values you have, including the profit margin that is meant to be 50% of the cost -> 35,220 = [36,000 + 300 * X] - 74,220. Then you rearrange the formula to solve for X i.e. ticket cost -> X = [(74,220 + 35,220) - 36,000]/300 = 232,20
(editiert)
This is extremely helpful, many thanks Moritz