Take a look at the panoptos and PowerPoint presentations to grasp the concept of the contribution margin (CM) method. Utilize the spreadsheet template and CM method to calculate and share the best weekday and weekend prices for November.

• How does the CM method illustrate the principle of operating where MC=MR?

Weekday		Weekend
P1	P2	Q1	Q2	Elasticity	Avg P	Elasticity	P1	P2	Q1	Q2	Elasticity
34	36	20,280	19,800	-0.42	35	-0.65	34	36	18,763	18,077	-0.65
35	37	20,040	19,560	-0.44	36	-0.68	35	37	18,420	17,734	-0.68
36	38	19,800	19,320	-0.45	37	-0.72	36	38	18,077	17,390	-0.72
37	39	19,560	19,080	-0.47	38	-0.75	37	39	17,734	17,047	-0.75
38	40	19,320	18,840	-0.49	39	-0.78	38	40	17,390	16,704	-0.78
39	41	19,080	18,552	-0.56	40	-0.83	39	41	17,047	16,356	-0.83
40	42	18,840	18,264	-0.64	41	-0.87	40	42	16,704	16,008	-0.87
41	43	18,552	17,976	-0.66	42	-0.91	41	43	16,356	15,660	-0.91
42	44	18,264	17,688	-0.69	43	-0.96	42	44	16,008	15,312	-0.96
43	45	17,976	17,400	-0.72	44	-1.00	43	45	15,660	14,964	-1.00
44	46	17,688	17,064	-0.81	45	-1.12	44	46	15,312	14,566	-1.12
45	47	17,400	16,728	-0.91	46	-1.26	45	47	14,964	14,167	-1.26
46	48	17,064	16,392	-0.94	47	-1.32	46	48	14,566	13,769	-1.32
47	49	16,728	16,056	-0.98	48	-1.39	47	49	14,167	13,370	-1.39
48	50	16,392	15,720	-1.03	49	-1.46	48	50	13,769	12,972	-1.46
49	51	16,056	15,360	-1.11	50	-1.54	49	51	13,370	12,571	-1.54
50	52	15,720	15,000	-1.20	51	-1.63	50	52	12,972	12,170	-1.63
51	53	15,360	14,640	-1.25	52	-1.71	51	53	12,571	11,770	-1.71
52	54	15,000	14,280	-1.30	53	-1.80	52	54	12,170	11,369	-1.80
53	55	14,640	13,920	-1.36	54	-1.90	53	55	11,770	10,968	-1.90
54	56	14,280	13,536	-1.47	55	-1.90	54	56	11,369	10,610	-1.90
55	57	13,920	13,152	-1.59	56	-1.89	55	57	10,968	10,253	-1.89
56	58	13,536	12,768	-1.66	57	-1.99	56	58	10,610	9,895	-1.99
Notes:
Calculations made with no changes in background demand and with competitor charging same price as Universal
Q=quantity of cars rented. Data come from Fleet Size Tab, hover over graph to get precision not shown in "data view"
Copied Weekend elasticities from Column L to Column G to make it easier to compare them to weekday (column E)
Avg P= mid-point of P1 and P2. We say that the calculated elasticity applies at the mid-point--i.e., at AVG P
Notice that weekend elasticity is greater (in absolute terms) than weekday at every price.

References