Interviewer view · keep this screen to yourself

Will a 10 percent price rise pay?

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 UK coffee-capsule brand sells capsules at GBP 0.40 each, with a variable cost of GBP 0.16. It is considering a 10 percent price rise, to GBP 0.44. How much volume can it lose before profit falls, and should it go ahead?

Format note: Candidate-led: you decide what to calculate and ask for evidence on customer response; the interviewer pushes back.

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 contribution per capsule?
Answer: Price GBP 0.40, variable cost GBP 0.16.
If asked: What do we know about how customers react to price?
Answer: A test in 20 stores showed volume fell about 8 percent after a 10 percent rise.

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.

Capsules earn a high contribution margin, so every lost sale is costly and the volume we can afford to lose is limited. My hypothesis is that a 10 percent rise still pays, as long as volume falls by less than the break-even amount, which I will calculate before looking at the test.

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.

Price rise versus volume loss
- Contribution per capsule before and after
- Key: Break-even volume loss
- Compare with the store test

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 now
What a strong candidate does: Candidate: "I will start with what each capsule earns today: price minus variable cost."
Contribution now (GBP): 0.4 - 0.16 = 0.24
Step 2: Contribution after the rise
What a strong candidate does: The GBP 0.04 price rise goes straight to contribution.
Contribution after (GBP): 0.44 - 0.16 = 0.28
Step 3: Break-even volume loss
What a strong candidate does: Candidate: "Before asking what customers will do, let me find how many sales we can afford to lose." Price rise divided by (contribution plus the price rise).
Break-even volume loss (%): 0.04 ÷ (0.24 + 0.04) × 100 = 14.29
Step 4: Profit with the tested 8 percent loss
What a strong candidate does: Interviewer: "The store test showed volume falling about 8 percent. Is that good or bad?" Candidate: "Good. 8 percent is well below the break-even of about 14 percent, so profit rises. As a ratio to today:"
Profit after vs today: 0.92 × 0.28 ÷ 0.24 = 1.07
Step 5: The opposite case: a 10 percent cut
What a strong candidate does: Interviewer: "The sales team wants a 10 percent cut instead, to win share." Candidate: "A cut of GBP 0.04 would need this much extra volume just to keep profit the same."
Volume gain needed for a cut (%): 0.04 ÷ (0.24 - 0.04) × 100 = 20

The recommendation to listen for

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

Raise the price to GBP 0.44. First, volume would have to fall by more than about 14 percent before profit drops. Second, the store test showed a fall of about 8 percent, which gives about 7 percent more profit. Third, the alternative the sales team wants, a 10 percent cut, would need about 20 percent more volume just to stay even, which is rarely achieved in a mature product.

Risks a strong answer names: The store test may understate long-term losses if customers switch slowly; Retailers may push back on a higher shelf price.

Next steps: Roll out the rise in one region first and track volume weekly; Agree the new shelf price with the two largest retailers before the national rollout.

Strong versus weak

A strong answer

Calculated the break-even volume loss and compared it with evidence on customer response.

A weak answer

Said "a price rise will lose customers" without asking how many customers it could afford to lose.

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.