Basil & Co: Can We Raise Prices 8%?

Consulting

hard50 min0 submissions

Razorpay

Scenario

Basil & Co (quick service restaurants, India) has not changed prices in three years while input costs have risen steadily. The CFO wants a 8% price increase across the board.

Current position.

Average selling price: ₹2675
Gross margin: 64%
Estimated price elasticity of demand: -1.4
Nearest competitor prices at ₹2327

Customer mix. Roughly 36% of revenue comes from large enterprise accounts on annual contracts with procurement teams; the remainder comes from smaller customers who buy on shorter cycles and switch more readily.

The Head of Sales is opposed, warning of "customer revolt". The CFO points out that margins have fallen every year since the last increase.

Supporting data

mix

smb revenue share pct: 64
enterprise revenue share pct: 36

market

price gap pct: 15
competitor price: 2327

economics

gross margin pct: 64
price elasticity: -1.4
average selling price: 2675
proposed increase pct: 8

derived hints

break even volume loss pct: 11.1

Your task

Advise on pricing. Provide:

Analysis — can the business sustain a 8% increase? Work through the volume the increase can afford to lose.
Risks — competitive response, churn concentration, contract timing.
Recommendation — a specific pricing structure and rollout plan.

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How you'll be graded

100 points, 60% to pass.

recommendation30
pricing analysis30
competitive dynamics20
customer segmentation20

Hint

Reveal suggested structure

Break-even volume loss — the volume a price rise can lose before profit falls: Δvolume = Δprice ÷ (gross margin + Δprice)
Predicted volume loss from elasticity: -1.4 × 8% = -11.2%.
Compare the two. If predicted loss is below break-even, the increase is profitable.
Segment — elasticity is an average across very different buyers.
Competitive response — what happens if the competitor holds price.
Design the architecture, then the rollout.