The decision
A tour operator can sell 40 weekend seats at ₹1,200 or test ₹1,450 with expected demand of 34 seats. Variable cost is ₹500. An ageing tour route incurs ₹3,000 extra support weekly.
How should the operator price scarce slots and assess the old route?
Worked solution
Reveal the visual and solution
- Contribution at the two prices is ₹700 × 40 and ₹950 × 34. The higher price needs 30 seats to beat baseline.
- Use transparent peak-slot pricing and test weekday spillover. Monitor cancellation and customer feedback as price changes.
- Calculate incremental demand retained by the legacy route after support. If its net contribution is negative, migrate customers with notice and honor existing bookings.