Case Prep

Profitability, actually explained

Revenue's down, or costs are up. Find out why, then recommend a fix. The most common case type you'll see, and the easiest one to structure badly, because it looks deceptively simple.

Structure it as

Same shape every time. The skill is in how carefully you drill down, not in memorising the tree.

1

Clarify the objective

The specific drop (how much, over what timeframe), and what's already been ruled out. Don't assume, ask.

2

Split Profit = Revenue − Costs

Say it out loud before you go further. This is the spine everything else hangs off.

3

Revenue = Price × Volume

Has price moved, volume moved, or both? Within volume: fewer customers overall, or the same customers buying less each time?

4

Costs = Fixed vs. Variable

Has a specific cost category actually moved, like input costs, labour, overheads, or is cost stable?

5

Isolate, then brainstorm

Once you know which side moved and why, brainstorm solutions aimed at that specific driver, not a generic "cut costs" or "raise prices."

6

Quantify before you close

Roughly size the impact of your recommendation. A number, even a rough one, beats a purely qualitative close.

Worked example: UK coffee chain

Profits down 15% over the past year. Footfall is roughly flat. Average spend per customer has dropped.

What this rules out

  • Footfall flat → not a volume/customer-count problem
  • No mention of rising costs → not primarily a cost problem

What this points to

  • Spend-per-customer down → a revenue mix problem: price, basket size, or both
  • Recommend: address discount-driven behaviour, push higher-margin add-ons

Notice what didn't happen: no jump to "cut costs" before confirming which side of the equation actually moved. That's the entire skill this case type is testing.

Watch for

Treating "revenue is down" as the full diagnosis. Price vs. volume are different problems with different fixes, naming the wrong one costs you the case even if your maths is perfect.

Other case types

Worth knowing all four before you walk in, you won't always get to pick which one shows up.