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# Having trouble with Question 4 - Can Someone Please Explain?

case math First Time Case Interview! Help Appreciated! HelpASisterOut OnlineGo
New answer on Jan 16, 2020
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For some reason having trouble figuring out question 4 ; maybe my brain is too tired, but help would be very much appreciated!

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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

You're awesome, thank you!

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

Amazing, thank you so much

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