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This may be a stupid question but why did you x6 when you calculate the price to achieved 30% profit margin?

1 answer

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Best Answer

Hi Liora,

Thanks for your question!

Upon a quick look, it seems that the Price is charged monthly, whereas the Cost is calculated per rental. As the Number of rentals per month is 6, you need to multiple the Cost by 6 to get to the Monthly Cost. So your monthly Profit is your Monthly Price minus Monthly Cost, hence:
Margin = (Price (monthly) - Cost (monthly)) / Price (monthly) = (Price - Cost per rental * Number of rentals) / Price = (Price - $1.75*6) / Price

Hope this helps!

Best regards,

Vasily

Hi Liora,

Thanks for your question!

Upon a quick look, it seems that the Price is charged monthly, whereas the Cost is calculated per rental. As the Number of rentals per month is 6, you need to multiple the Cost by 6 to get to the Monthly Cost. So your monthly Profit is your Monthly Price minus Monthly Cost, hence:
Margin = (Price (monthly) - Cost (monthly)) / Price (monthly) = (Price - Cost per rental * Number of rentals) / Price = (Price - $1.75*6) / Price

Hope this helps!

Best regards,

Vasily

(edited)