Can someone explain this calculation?

Question

How much market share can the client lose before reducing the price by 20% becomes an option?

Answer 1

Hi Ameya,

So what they're basically saying is, what is the reduced profit from cutting price by 20%?

Then, what is the equivalent amount of change in units sold that would get you the same reduction in profit (essentially saying you would reduce price to keep selling the same amount of units).

You're basically palying aroudn with different variables in a breakeven equation:

Break even quantity = Fixed costs / (Sales price per unit – Variable cost per unit)

Answer 2

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Answer 3

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Answer 4

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