Pin It
Favorite

Fuzzy, Fuzzy Math 

Last week The Boot opined that tavern owners would only take a $6,300 hit if their share of video lottery game revenues drops from roughly 24% to 15%. I suspect that The Boot may have attended the Timothy Geithner/Charles Rangel School of Fuzzy Math and/or he/she got a head start sampling some of the delicious barrel-aged brew for the Little Woody festival.

If the average tavern owner earns $70,000 with the roughly 24% commission rate, their gross revenues are approximately $291,667 (that is, $70,000/0.24). If their commission rate is cut from roughly 24% to 15% (a 9 percentage point drop) and the gross revenues stay the same, their commission would fall to roughly $43,750 (that is, 15% of $291,667). Their revenues fall by approximately 37.5% (that is, 1 - 43,750/70,000) and not by 9%.The revenue decrease is the same at the reduction in the commission percentage of 37.5% (that is, 1 -0.15/0.24). Total revenues fall from $70,000 to $43,750 - a whopping $26,250 drop and not a mere $6,300 drop.

A 37.5% drop in revenues is a huge hit for any business. For example, I am sure the Source would feel strongly compelled to resist a 37.5% decrease in your advertising rates.

Bruce Dechert


Comments

Subscribe to this thread:

Add a comment

Latest in The Mailbox

More by Source Weekly

  • Picks 10/12-10/19

    • Oct 12, 2016
  • DO NOT SPIT ON MY CAR

    We recently visited Bend for the Film Festival and very much enjoyed ourselves, with one small exception. We parked our Ford in the public parking structure, only to find when we returned on Friday night that it had been spat upon, apparently in retribution for our Obama 2012 bumper sticker. I understand that whoever did this was passionate about politics, something I have always shared.
    • Nov 7, 2012
  • THE SOURCE ROCKS, BUT 'ONE DAY AT A TIME' DOESN'T

    After living in Bend for a year and a half, I recently stopped through on business. I love the town, the people, and all the outdoor beauty the area offers. One of my favorite things about Bend is without question, The Source. From the first time I read it, I knew it would be a cover-to-cover great time for me to enjoy all the stories, community news, the updates on all the music and arts, presentations, and great things goings on around town.
    • Nov 7, 2012
  • More »

Readers also liked…

© 2017 LAY IT OUT INC | 704 NW GEORGIA, BEND, OREGON 97703  |   Privacy Policy

Website powered by Foundation