Calculating price

case math
New answer on Aug 02, 2021
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Anonymous A asked on Jul 31, 2021

I'm not sure how they are calculating price here. I got the slope part, but after that? It's not a y=slope*x + b formula? Can we simplify this and just assume that since the accuracy is closer to 99%, our price should be closer to 2k, and do a proportional decrease (i.e. 2000 * 95%/99%= $1920?) 

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Silvia
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replied on Aug 02, 2021
McKinsey| 5-yrs in consulting| Peer leader Consulting Club|MBA at LBS| up to 50% discount available

Hey there,

Think about the solution like this:

  • Each percaentage point of additional accuracy after 80% (blod test accuracy) worth $97.5 (your slope)
  • Our clients, test has 15 pp more than the blod test (95%-88%), so it has an additional value of: $97.5*15 = $1462.5
  • The first 80% accuracy points worth 50$ as in the blood test - the additional 15% points worth $1,462.5 as calculated above
  • Total price = $1,462.5 + $50 
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Silvia

McKinsey| 5-yrs in consulting| Peer leader Consulting Club|MBA at LBS| up to 50% discount available
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