Hi there,
I do not understand the calculation of the final question:
Which percentage of customers has to buy the warranty in order to keep WyCar’s profit margin from model “300” stable?
80% of customers have to buy the warranty – average profit from the service is € 1,250 and the price decline to be compensated is € 1,000.
How do we calculate the 80% and how do we know that 80% of customer have to buy the warrantly? The margin should be (1,250-1000)/1250 = 20%
Thank you very much!
Hi there,
I can help you on this.
- EUR 1,000 * 10 = 1,250 * 10* x%
Solving for x% you will have
x% = 10,000/12,500 = 80%
Of course this works with any value of total costumers (point 3.)
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