Ask for Costs and Revenues

Question

Hi!

What is the best way of asking for costs and revenues? Often I tend to mention the costs I can come up with on the go, then ask for them and whether there are any other relevant costs? Is this a good approach? Or is it better to ask for what the total costs are? And then the breakdown? And what approach is the best for revenues?

Answer 1

Hello!

Precisely for the high amount of questions (1) asked by my coachees and students and (2) present in this Q&A, I created the “Math & Formulas - Economic and Financial concepts for MBB interviews”, recently published in PrepLounge’s shop (https://www.preplounge.com/en/shop/prep-guide/economic_and_financial_concepts_for_mbb_interviews).

After +5 years of candidate coaching and university teaching, and after having seen hundreds of cases, I realized that the economic-related knowledge needed to master case interviews is not much, and not complex. However, you need to know where to focus! Hence, I created the guide that I wish I could have had, summarizing the most important economic and financial concepts needed to solve consulting cases, combining key concepts theorical reviews and a hands-on methodology with examples and ad-hoc practice cases.

It focuses on 4 core topics, divided in chapters (each of them ranked in scale of importance, to help you maximize your time in short preparations):

Economic concepts: Profitability equation, Break even, Valuation methods (economic, market and asset), Payback period, NPV and IRR, + 3 practice cases to put it all together in a practical way.
Financial concepts: Balance sheet, Income statement/P&L and Performance ratios (based on sales and based on investment), +1 practice case
Market structure & pricing: Market types, Perfect competition markets (demand and supply), Willingness to pay, Pricing approaches, Market segmentation and Price elasticity of demand, +1 practice case
Marketing and Customer Acquisition: Sales funnel, Key marketing metrics (CAC and CLV) and Churn, +1 practice case

Feel free to PM me for disccount codes for the guide, and I hope it helps you rock your interviews!

Answer 2

In general, presenting the costs that you can come up with first is a very good way to approach things. Next, you can ask whether you missed anything relevant. The key word here is relevant - many juniors struggle with completeness vs. relevance. Showing that you can prioritize and separate the important from the unimportant will definitely help you.

That being said, if it's a simple math exercise (i.e. calculate break even) there may be no need to break down costs - totals for fixed and variable costs may be fine.