Corbelworks: Pricing Case Study with Answer

I would split the problem in two: how much to charge, and what unit to charge for. The level comes from three reference points: a cost-based floor, the competitor prices customers will compare against, and a ceiling set by the value SiteCadence creates.

The unit matters because contractors differ so much in size. A good pricing metric grows with the value each customer gets, so I would check, segment by segment, whether seats, projects or company size track willingness to pay. Then I would run the revenue math for each model and pick the one that wins on revenue and gross profit without losing a segment.

• Price level: cost to serve and target margin (floor), competitor prices (reference), value created per customer (ceiling).
• Willingness to pay by segment: small, mid-size and large contractors, per seat and per project.
• Revenue math per model: which segments buy at each price, customers x monthly bill, less cost to serve.
• Risks: competitor response, seat sharing, tier boundaries, effect on the estimating business.

What the interviewer is looking for

• Good: covers cost, competitor and value reference points.
• Strong: separates price level from pricing metric and says the metric should move with customer value.
• Excellent: points out that segments differ in seats and projects, so the same unit price can be cheap for one segment and too expensive for another.

Push-back: Why not just copy the competitor most of our customers already know?

Cost-based: at $8 per seat and an 80% target margin, the price per seat is 8 / (1 - 0.8) = $40, so $480 a month for 12 seats.

Competitor-based: Competitor X would charge 12 x $45 = $540, Competitor Z's 20-seat tier is $599, and Competitor Y would charge 10 x $90 = $900. The reference range is $540 to $900.

Value-based: each mid-size project saves 8 hours x $60 = $480 of supervisor time plus 0.2 idle days x $2,000 = $400, so $880 per project and $8,800 a month across 10 projects. At 10% capture the price would be $880.

So the range runs from a $480 floor to an $880 value-based price, and the stated WTP of $700 sits inside it, close to the middle of the competitor range.

What the interviewer is looking for

• Good: gets the $480 cost-based price and the $8,800 of monthly value.
• Strong: converts each competitor into the same unit (dollars per customer per month) before comparing.
• Excellent: notes the stated WTP of $700 is well below the $8,800 of value, so contractors anchor on competitor prices, not on value, and proof of value is a lever for later price rises.

Push-back: The value is $8,800 a month. Why not charge $2,000 and still leave the customer most of it?

Per seat, WTP is $50 for small (150 / 3), $58 for mid-size (700 / 12) and $40 for large (2,400 / 60). Large contractors have many supervisors who use the app lightly, so any seat price above $40 loses them.

Per project, WTP is $37.50 for small (150 / 4), $70 for mid-size (700 / 10) and $96 for large (2,400 / 25), a 2.6x spread. Small subcontractors juggle several short jobs, so a project price high enough to matter for large builders prices small firms out.

Neither unit fits all three segments. Seats are closer (a 1.5x spread), but what really tracks WTP is company size, which is exactly what a tiered model charges for.

What the interviewer is looking for

• Good: computes WTP per seat and per project for each segment.
• Strong: explains why each unit fails for a specific segment (light-use seats at large firms, many small jobs at small firms).
• Excellent: concludes that WTP follows company size, which points to tiers, before running any revenue math.

Per seat at $45: small pays $135 and mid-size $540, both under WTP, but large would pay 60 x $45 = $2,700, above its $2,400 WTP, so large does not buy. Revenue is 1,500 x $135 + 600 x $540 = $526,500 a month, or $6.3 million a year.

Per project at $65: small would pay 4 x $65 = $260, above its $150 WTP, so small does not buy. Mid-size pays $650 and large $1,625. Revenue is $633,750 a month, or $7.6 million a year.

Tiered: each segment lands in its own tier just under its WTP, so all three buy. Revenue is 1,500 x $149 + 600 x $649 + 150 x $2,299 = $957,750 a month, or $11.5 million a year, the only model above the $10 million goal.

After $8 per seat of cost to serve, gross profit is $5.2 million for per seat, $6.0 million for per project and $9.5 million for tiered, an 83% gross margin, above the board's 80% bar.

What the interviewer is looking for

• Good: works out which segments buy under each model and gets the revenue roughly right.
• Strong: shows that per seat loses large builders and per project loses small subcontractors, which is why both miss $10 million.
• Excellent: computes gross profit on seats actually served and checks the tiered model against the 80% margin bar.

Push-back: Per project at $65 already gets mid-size and large, the two most valuable segments. Why not drop the price to $37 so small firms buy too?

The biggest risk is price comparison with Competitor Z, which is $20 to $100 a month cheaper per tier. The premium is defensible only because SiteCadence plugs into the estimating software customers already use. Even in the worst case, matching Z at $129 / $599 / $2,199 gives 1,500 x $129 + 600 x $599 + 150 x $2,199 = $882,750 a month, or $10.6 million a year, still above the $10 million goal and above both other models.

Second, tiers leave value on the table. The tiered prices capture only 6% to 8% of the value in Exhibit C (small: $149 of $1,800; mid-size: $649 of $8,800; large: $2,299 of $36,250), below the usual 10%. That is fine for launch while contractors learn what the product is worth, and it gives room for annual increases once pilot data proves the savings.

Third, tier boundaries: a mid-size firm at 21 seats jumps from $649 to $2,299. I would add a paid add-on of extra seat packs between Pro and Enterprise so growing customers do not churn or share logins.

• Competitor Z response: lead with the estimating integration and the pilot savings, not with price.
• Value left on the table: plan price reviews every 12 months tied to measured idle-day savings.
• Boundary cliffs: seat packs between tiers; watch customers bunching just under 5 and 20 seats.
• Estimating business: offer a bundle discount so SiteCadence strengthens, not threatens, estimating renewals.

What the interviewer is looking for

• Good: names competitor comparison and tier-boundary risks.
• Strong: stress-tests the recommendation by matching Competitor Z and shows tiered still wins.
• Excellent: quantifies how little value the tiers capture and turns that into a staged price-increase plan.

Push-back: If Competitor Z cuts its prices by another 20% next year, does your answer change?

Launch SiteCadence with three tiers: $149 a month for up to 5 seats, $649 for up to 20 seats and $2,299 unlimited. Willingness to pay follows company size, not seats or projects, so tiers are the only model every segment buys: about $11.5 million of revenue and $9.5 million of gross profit a year by Year 3, against $7.6 million of revenue per project and $6.3 million per seat.

The prices sit between our $40-a-seat cost floor and the value we create, capturing only 6% to 8% of contractor savings, and even matching Competitor Z we would still make $10.6 million. Next, we should launch with seat packs between tiers, sell the estimating integration rather than price, and review prices after 12 months of measured savings.

What the interviewer is looking for

• Good: names the tiered model and the prices.
• Strong: backs it with the revenue comparison and the $10 million goal.
• Excellent: includes the worst-case check against Competitor Z and a concrete plan to capture more value later.

Launch SiteCadence with tiered pricing by company size: Starter $149 a month (up to 5 seats), Pro $649 (up to 20 seats) and Enterprise $2,299 (unlimited seats).

Tiered is the only model all three segments buy, worth about $11.5 million of revenue and $9.5 million of gross profit a year by Year 3 (83% margin), versus $7.6 million of revenue per project at $65 (loses small firms) and $6.3 million per seat at $45 (loses large builders).

The prices sit above the $40-a-seat cost floor and capture only 6% to 8% of the value contractors get, and even matching Competitor Z's tiers would still bring in $10.6 million, above the $10 million goal.

Next steps: add seat packs between tiers to avoid boundary cliffs, sell the estimating integration as the reason for the premium over Competitor Z, and raise prices at the first annual review once pilot savings are proven at scale.