You're holding their margin % equal, but cutting 30% off revenue probably won't cut 30% off their margin costs. In reality it's too complicated to figure with

You're holding their margin % equal, but cutting 30% off revenue probably won't cut 30% off their margin costs. In reality it's too complicated to figure with a simple formula. But, he was right if margin is a fixed cost (like, all initial development). If margin is purely an incremental cost (like network costs that increase with each sale), then he would be wrong.