Question

Assume that netflix has introduced a new bundle service for their streaming services. Bundle 1 includes a base price of $9 to cover 25 hours of streaming for the month and variable price of $0. 10 for every 30 minutes over that 25 hours. Bundle 2 includes no base price, but a variable price of $0. 25 for every 30 minutes of streaming per month. When a consumer attempts to decide which bundle to use, what is he or she determining?.

Answer 1

When a consumer attempts to decide which bundle to use, he or she is determining the Breakeven point.

The break-even point threshold is reached when overall costs and total revenues are equal, leaving your small firm with no net benefit or loss.

This is a crucial calculation to include in your business plan for every new venture. This is due to the fact that some businesses may take years before becoming profitable, frequently losing money in the initial months or years before achieving break-even. The Break-even point is crucial in any company plan given to a potential investor because of this.

This might be a useful tool for existing organizations to verify their potential recovery from disaster scenarios in addition to cost analysis and profit evaluation at various sales volumes.

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