Industry primers

Industry primer

Software and Tech: A Case Interview Primer

Software costs a lot to build and very little to deliver to one more customer, so the case usually turns on winning and keeping customers.

What's new here: how software and tech make money.

The business
Market
Not used in this case
Existing businessRevenue
Product 1
Price
  • List price
  • Discounts and promotions
  • Mix across tiers or sizes
  • Price against competitors
  • What customers are willing to pay
Quantity
  • Number of customers: market size x your share
  • Purchases per customer: how often they buy
  • Units per purchase
  • Customers kept versus lost
  • Capacity: how many you can actually serve
Product 2
Service 1
For a service, units are visits, hours or members
Mix
  • Share of revenue from each
Existing businessCost
Variable
Product 1
  • Materials or inputs per unit
  • Labor per unit
  • Delivery
  • Payment fees
Product 2
Service 1
Fixed
  • Rent
  • Salaried staff
  • Marketing and overhead
New business
Not used in this case
Operations and risks
Not used in this case
The business
  • 1MarketNot used
  • 4New businessNot used
  • 5Operations and risksNot used

Software costs a lot to build and very little to deliver to one more customer, so the case usually turns on winning and keeping customers.

How the business makes money: who pays, for what, and the main costs.

Who pays

In software and tech

  • Businesses or people, by subscription
  • For a marketplace: buyers and sellers, through a cut of each sale

For what

In software and tech

Software used online, rented rather than bought

How revenue is earned

In software and tech

  • Customers × what each pays a year
  • Grows as customers add seats or move up a tier

The main costs

In software and tech

  • Building the product: engineers, mostly fixed
  • Winning each customer: sales and marketing
  • Hosting and support, small per customer

What decides profit

In software and tech

  • Winning customers at a sensible cost
  • Keeping them, and growing what they pay

A customer who leaves early can cost more to win than they ever pay.

Create a free account to read the rest.

It takes a minute, and reading is always free.

Create a free account I have an account: sign in

Reading helps. A live case shows you where you stand.

Try your first case free Start Learn free