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An e-bike subscription in Madrid

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 Spanish maker of electric bikes wants to launch a monthly subscription in Madrid: the customer gets a bike, servicing, and insurance for one monthly fee. Should it launch, and at what price?

Format note: Candidate-led: you set the structure (demand, economics, channel), ask for the numbers, and recommend a price; the interviewer answers what you ask.

2. Answers to clarifying questions

Give these answers only if the candidate asks. If they ask something not listed, give a sensible answer or say it does not matter here.

If asked: What is the client's rule for new ventures?
Answer: The one-time launch cost must pay back within three years.
If asked: Would subscribers otherwise have bought one of our bikes?
Answer: Research says very few would; they want a bike without the upfront cost. Ignore cannibalization.
If asked: Do we launch in one city first?
Answer: Yes, Madrid.

3. The hypothesis a strong candidate states

Listen for an early, testable guess like this one. It does not need to match word for word.

A subscription spreads the bike's cost over time, so my hypothesis is that demand exists, and that the risk is the economics: after the bike's cost and servicing, each subscriber may earn very little.

4. 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.

Demand, economics, and route to market
- Key: Economics: contribution per subscriber per month
- Break-even subscribers for the yearly running cost
- Demand: target group and take-up at each price
- Payback of the launch cost versus the three-year rule

5. 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 subscriber
What a strong candidate does: Candidate: "What would we charge, and what does each subscriber cost us?" Interviewer: "The team suggests EUR 49 a month. Servicing and insurance cost EUR 14 a month, and each bike costs EUR 900 and lasts about three years." Candidate: "So the bike costs EUR 25 a month over 36 months."
Contribution per subscriber (EUR a month): 49 - 14 - 900 ÷ 36 = 10
Step 2: Break-even subscribers
What a strong candidate does: Interviewer: "The app and two service hubs cost EUR 600,000 a year to run, on top of a one-time launch cost of EUR 1.2 million."
Subscribers to cover running costs: 600,000 ÷ (10 × 12) = 5,000
Step 3: Demand at EUR 49
What a strong candidate does: Candidate: "Who is the target?" Interviewer: "About 800,000 commuters live within 10 km of their work. A survey says 2 percent would subscribe at EUR 49." Candidate: "Surveys overstate, so I will assume half of that by year two."
Subscribers in year two: 800,000 × 0.02 × 0.5 = 8,000
Step 4: Yearly profit at EUR 49
What a strong candidate does: Contribution from 8,000 subscribers minus the running cost.
Yearly profit at EUR 49 (EUR): 8,000 × 10 × 12 - 600,000 = 360,000
Step 5: Payback at EUR 49
What a strong candidate does: The launch cost divided by yearly profit: just over three years, which misses the rule. This uses the year-two subscriber count for every year, a simplification; a slower first year would make payback longer still.
Payback at EUR 49 (years): 1,200,000 ÷ 360,000 = 3.33
Step 6: Test a higher price
What a strong candidate does: Candidate: "Did the survey test other prices?" Interviewer: "At EUR 55, 1.5 percent would subscribe." Candidate: "Fewer subscribers, but contribution rises from EUR 10 to EUR 16 a month."
Yearly profit at EUR 55 (EUR): 800,000 × 0.015 × 0.5 × (55 - 14 - 25) × 12 - 600,000 = 552,000
Step 7: Payback at EUR 55
What a strong candidate does: The same launch cost, paid back in about 2.2 years.
Payback at EUR 55 (years): 1,200,000 ÷ 552,000 = 2.17

The recommendation to listen for

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

Launch the subscription in Madrid, but at about EUR 55 a month, not EUR 49. First, at EUR 49 each subscriber contributes only EUR 10 a month after the bike and servicing, so the launch pays back in about 3.3 years, outside the three-year rule. Second, at EUR 55 contribution rises to EUR 16, and even with a quarter fewer subscribers the yearly profit is about EUR 552,000, a payback of about 2.2 years. Third, the break-even point of about 5,000 subscribers at EUR 49, or about 3,125 at EUR 55, is well below expected demand, so the downside is limited. Sell mainly online, with the service hubs as the place to try a bike.

Risks a strong answer names: Payback assumes year-two subscriber numbers from the start; if the first year builds slowly, payback at EUR 55 moves toward or past the three-year limit, so the pilot must track how fast subscribers join; Subscribers may cancel early, before the bike's cost is recovered; Stolen or damaged bikes could raise the monthly cost above EUR 14; The survey may overstate take-up even after halving it.

Next steps: Run a three-month pilot with 300 subscribers at EUR 55 and track cancellations; Agree insurance terms that cap the cost of theft.

Strong versus weak

A strong answer

Built contribution per subscriber including the bike's cost, found break-even subscribers, halved the survey answer, and tested a second price that passes the payback rule.

A weak answer

Multiplied 800,000 commuters by 2 percent and EUR 49, called it a EUR 9 million market, and never subtracted the cost of the bikes.

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.