How to structure a profitability case

“Our client's profits have fallen over the last year. Why, and what should they do?” If you interview for consulting you'll see this in some form, because profitability is the most common case type in first rounds. Everyone knows the basic framework. The difference between a pass and a fail is usually what you do with it.

Start with the profit equation, then make it specific

The base is simple: profit = revenue − costs. Revenue = price × volume. Costs split into fixed and variable. Every interviewer has heard this tree hundreds of times, so presenting it unchanged tells them you've memorised something, not thought about their client.

Make each branch about the business in front of you. Say the client is a regional gym chain. Volume isn't “units sold”, it's members, and members change through new joiners and cancellations. Price isn't one number, it's the mix of membership tiers, plus extras like personal training. Costs are mostly fixed: rent, staff, equipment.

That last line matters. Always check whether competitors are seeing the same thing. If the whole industry is down, the cause is probably external and the fix looks very different.

Say a hypothesis early

After presenting your structure, say where you'd start and why. You don't need to be right. You need to show you're thinking, not just collecting data.

“Since a gym's costs are mostly fixed, I suspect the drop is on the revenue side, probably membership numbers. I'd like to start there. Do we know how members and revenue have moved over the year?”

Size the driver before you explain it

This is the step that separates strong candidates. Before you go hunting for causes, work out how much of the drop each side of the tree explains. Then spend your time on the biggest piece.

Now you can say something useful: “Most of the fall, about 80%, comes from losing 2,000 members. Costs are up a bit, but that's secondary. I'd focus on why membership fell.” Then you split members into joiners and cancellations. Did fewer people join, or did more leave? Those have completely different causes and fixes.

Real cases often hold the data back until you ask for it. You won't get the membership table unless you ask about membership. If you want to practise with an interviewer who only shows the exhibit when you ask the right question, that's how RoundReady's consulting track runs its cases.

Read every exhibit for the so-what

When you get a chart, take a few seconds, then say three things: what it shows, the number that matters and what it means for your hypothesis. For example: “This shows cancellations by site. Most sites are steady, but the three city-centre sites have doubled their cancellations since March. That's where the member loss is. Did anything change there in March?”

The last question is the useful habit. Each exhibit should lead you to the next thing you need to know.

Brainstorm in buckets, not a list

At some point you'll be asked “what could be causing this?” or “how could they fix it?” Don't fire off ideas at random. Group them, out loud.

“I'd think about it as things that pull members away, things that push them out and things about the product itself. Pull: a new budget gym nearby. Push: a price rise or a bad experience, like broken equipment or crowding. Product: timetable changes, fewer classes.”

Buckets show structure. They also make it easy for the interviewer to say “the competitor one, tell me more,” which is often how the case moves on.

Lead the recommendation with the answer

At the end, the interviewer will often say: “The CEO walks in. What do you tell them?” Answer first, then reasons, then next steps. Under a minute.

Common ways this case goes wrong

1. A generic tree with no reference to the client's business.
2. Exploring every branch equally instead of sizing the drop and focusing on the biggest driver.
3. Describing exhibits without saying what they mean.
4. Forgetting the market check. Are competitors seeing the same thing?
5. A recommendation that recaps the case in order. The CEO wants the answer first.
6. No risks or next steps. One sentence on each is enough, but leaving them out looks unfinished.

Profitability cases reward structure more than cleverness. If you size before you explain, read exhibits for the so-what and lead with the answer, you'll be ahead of most candidates who know the same framework as you.