how to understand the last calculation

Hello,

I will try to make it clearer for you:

• Decrease in profit due to change of price = Old price - New price = 51.000 - 50.000 = 1.000
• Profit for each warranty sold = Revenues - cost of replacement = 2.350 - 1.100 = 1.250

Let's call with X the percentage of the total customer base (CB) that subscribe a wanrranty. In order to keep the same profit margin for each vehicle sold we can write:

• Decrease in profit = Profit from warranty --> 1.000 * CB = X * CB * 1250 --> X = 80 %

Does it make sense?
Feel free to text me for any further explanation needed.

Luca