Interviewer view · keep this screen to yourself

3. Per seat and per customer: software sold by subscription

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

A fictional software company in Bengaluru sells project tools to small firms in the US. It charges USD 30 per seat (one user) per month, with a gross margin of 80 percent. A typical customer buys 20 seats. Winning a customer costs USD 7,200 in sales and marketing. Each month, 2 percent of customers leave. Is a customer worth winning?

2. Answers to clarifying questions

This case has no scripted clarifying answers. Answer from the prompt, and say "assume what you think is reasonable" if the prompt does not cover it.

3. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Compare LTV with CAC, and check payback
- Contribution per customer per month
- Average lifetime = 1 / monthly churn
- Key: LTV, LTV to CAC, payback

4. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: Contribution per seat
What a strong candidate does: USD 30 at an 80 percent gross margin.
Contribution per seat per month (USD): 30 × 0.8 = 24
Step 2: Contribution per customer
What a strong candidate does: 20 seats.
Contribution per customer per month (USD): 24 × 20 = 480
Step 3: Payback
What a strong candidate does: CAC divided by monthly contribution.
CAC payback (months): 7,200 ÷ 480 = 15
Step 4: Average lifetime
What a strong candidate does: 1 divided by 2 percent monthly churn.
Average customer lifetime (months): 1 ÷ 0.02 = 50
Step 5: LTV
What a strong candidate does: Monthly contribution times lifetime.
LTV (USD): 480 × 50 = 24,000
Step 6: LTV to CAC
What a strong candidate does: LTV divided by CAC.
LTV to CAC ratio: 24,000 ÷ 7,200 = 3.33

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

Yes, the company should keep winning customers, because each one returns about 3.3 times its USD 7,200 cost to win, an LTV of USD 24,000. First, each customer contributes USD 480 a month (20 seats at USD 24), so the cost comes back in 15 months. Second, at 2 percent monthly churn a customer stays about 50 months, well beyond payback. The risk is churn: at 4 percent a month, lifetime halves to 25 months and LTV falls to USD 12,000. As a next step, track churn by customer cohort every month.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.