Interviewer view · keep this screen to yourself

How much pricing room does lock-in give a software supplier?

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.

Illustrative numbers. A manufacturer in Germany pays EUR 100,000 a year for the business software that runs its orders and accounts. A rival offers the same thing 20 percent cheaper. Switching would need a EUR 300,000 migration project, EUR 50,000 of staff training, and about three months of slower work costing EUR 25,000 a month. Should the customer switch, and how much room does the current supplier have?

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.

Switch only if yearly savings repay the cost of switching fast enough
- One-off cost of switching = migration + training + disruption
- Yearly saving = current price x discount
- Payback = cost of switching / yearly saving

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: Cost of switching
What a strong candidate does: EUR 300,000 plus EUR 50,000 plus three months at EUR 25,000.
One-off cost of switching (EUR): 300,000 + 50,000 + 3 × 25,000 = 425,000
Step 2: Yearly saving
What a strong candidate does: 20 percent of EUR 100,000.
Yearly saving (EUR): 100,000 × 0.2 = 20,000
Step 3: Payback
What a strong candidate does: How many years of savings it takes to repay the move.
Payback (years): 425,000 ÷ 20,000 = 21.25
Step 4: Cost of switching per year, over five years
What a strong candidate does: If the customer judges any move over five years, the switching cost is worth this much a year.
Switching cost spread over 5 years (EUR per year): 425,000 ÷ 5 = 85,000

The recommendation to listen for

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

The customer should not switch: the move would take over 21 years to pay back. Seen from the supplier, lock-in is large. Over a five-year view, leaving costs the customer about EUR 85,000 a year, so in theory the supplier could charge far more than a rival before losing the account. In practice that room is limited by two things: rivals can offer to pay the migration cost themselves, and a customer who feels trapped plans its exit for the next big upgrade, when it has to move anyway.

Risks a strong answer names: A rival who pays the EUR 300,000 migration removes most of the lock-in; Squeezing a locked-in customer turns them into a future lost customer.

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.