“One employee comes to you and tells you: if we reduce the price of our rooms by 20%, we can increase the number of customers by 30%. Question: would the idea of your employee be worth it?”

The tricky part about this exercise is that she clearly asked me to NOT use any software (e.g. Excel, Mobile phone) or any calculator to take a decision, but that I could of course use pen and paper to do it. It was actually quite difficult to remember how to calculate without Excel I must say, but positively challenging. Of course, I asked her that I needed the room price, the costs and the number of customers we have monthly to calculate it, and she gave me the information afterwards. - Room price: 40 € - Fixed cost per room: 10 € - Number of monthly customers: 500 So here is the calculation to do (and that took me ages to calculate with pen and paper, unfortunately). First you have to calculate the monthly revenue without any discount: - Your revenue per room is : (room price) - (fixed cost), which makes 30 € (40 € - 10 € = 30 €) - Then you can multiply your revenue per room by the number of customers, which makes 15000€ ( 30 € x 500 = 15000 €) - So 15000 € is what you earn monthly with 500 customers, without any discount. Now we have to see if the 20 % discount that will bring us 30% more customers are worth it or not: - First you have to calculate the room price discounted, so reduced by 20%, which makes 32 € (40 € x 20% = 8 € and 40 € - 8 € = 32 €) - Same as earlier, you have to deduct the costs of you room to calculate you revenue per room, which makes 22 € (32 € - 10 € = 22 €) - The number of customers is supposed to increase by 30%, which makes 650 customers ( 500 customers x 30% = 150 and if you add these 150 to 500, it makes 650) - Now you just have to calculate what we would earn monthly, and that would be 22 € x 650 customers, which would be 14500 € 14500 € is 500 € less than the 15000 € you were earning without discount; so it’s actually NOT worth it.

22 € x 650 = 14300 €

Thanks for the heads-up, it's of course 14300 €... sorry for the typo! :)