Strategic judgment · Intermediate · About 6 min
Defend your pricing and economics
Explain what remains after delivering the service
Founder of Handover · Prospective buyer or investorRead the fictional case: The Handover paid pilot
The Handover paid pilot Defend a testable proposal without overstating demand or economics.
Fictional practice case. Handover prepares job-handover packs for small service agencies. Twelve agency owners were interviewed: eight described difficulty handing work between staff, five expressed interest in a trial, and two signed a four-week paid pilot at $600 each. Each pilot covers ten packs and two hours of support. The delivery estimate is 45 minutes per pack at a labor cost of $40 an hour. Software costs $100 per month for the business, not per customer. Sales, founder time, taxes, and other overhead are not included in these figures. Neither customer has completed or renewed the pilot. No evidence establishes demand outside these interviews and purchases.
Revenue alone does not establish that an offer is economically attractive. Work through the delivery required for one customer and identify which costs the calculation includes.
Ten packs at 45 minutes each require 7.5 hours. Adding two support hours gives 9.5 hours, costing $380 at $40 an hour. At a $600 price, $220 remains before the shared software charge and other excluded costs. That is a contribution calculation, not proof of company profitability.
Follow one argument across the exchange
The calculation includes ten packs and the promised support.
The remaining amount is not yet the founder’s profit.
The shared charge is included once, and excluded costs remain explicit.
Calculate delivery consistently
Include both production time and the support promised in the offer.
Distinguish contribution from profit
Explain which fixed and indirect costs are still outside the calculation.
Identify the sensitive assumption
Ask which change in delivery, price, or acquisition cost could alter the conclusion.
A sale can contribute without proving profitability
The Handover paid pilot Defend a testable proposal without overstating demand or economics.
Fictional practice case. Handover prepares job-handover packs for small service agencies. Twelve agency owners were interviewed: eight described difficulty handing work between staff, five expressed interest in a trial, and two signed a four-week paid pilot at $600 each. Each pilot covers ten packs and two hours of support. The delivery estimate is 45 minutes per pack at a labor cost of $40 an hour. Software costs $100 per month for the business, not per customer. Sales, founder time, taxes, and other overhead are not included in these figures. Neither customer has completed or renewed the pilot. No evidence establishes demand outside these interviews and purchases.
- Direct delivery cost
9.5 hours at $40 costs $380 per pilot.
The calculation includes ten packs and the promised support.
- Contribution
The $600 price leaves $220 before software and other overhead.
The remaining amount is not yet the founder’s profit.
- Both pilots
Two pilots contribute $440 before the shared $100 monthly software charge, leaving $340 before sales, founder time, taxes, and other overhead.
The shared charge is included once, and excluded costs remain explicit.
The financial claim should say both what the calculation shows and which costs remain.
Test the reasoning
Read the fictional practice case
The Handover paid pilot Defend a testable proposal without overstating demand or economics.
Fictional practice case. Handover prepares job-handover packs for small service agencies. Twelve agency owners were interviewed: eight described difficulty handing work between staff, five expressed interest in a trial, and two signed a four-week paid pilot at $600 each. Each pilot covers ten packs and two hours of support. The delivery estimate is 45 minutes per pack at a labor cost of $40 an hour. Software costs $100 per month for the business, not per customer. Sales, founder time, taxes, and other overhead are not included in these figures. Neither customer has completed or renewed the pilot. No evidence establishes demand outside these interviews and purchases.
Your turn
Founder of Handover · Prospective buyer or investorDefend or challenge the $600 pilot price using the delivery estimate. Show the calculation and identify the assumption you would test first.
Read the fictional case: The Handover paid pilot
The Handover paid pilot Defend a testable proposal without overstating demand or economics.
Fictional practice case. Handover prepares job-handover packs for small service agencies. Twelve agency owners were interviewed: eight described difficulty handing work between staff, five expressed interest in a trial, and two signed a four-week paid pilot at $600 each. Each pilot covers ten packs and two hours of support. The delivery estimate is 45 minutes per pack at a labor cost of $40 an hour. Software costs $100 per month for the business, not per customer. Sales, founder time, taxes, and other overhead are not included in these figures. Neither customer has completed or renewed the pilot. No evidence establishes demand outside these interviews and purchases.
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Delivery requires… At $40 an hour… The price leaves… This depends on…
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Review and continue
The Handover paid pilot Defend a testable proposal without overstating demand or economics.
Read the practice task and fictional case
Defend or challenge the $600 pilot price using the delivery estimate. Show the calculation and identify the assumption you would test first.
Fictional practice case. Handover prepares job-handover packs for small service agencies. Twelve agency owners were interviewed: eight described difficulty handing work between staff, five expressed interest in a trial, and two signed a four-week paid pilot at $600 each. Each pilot covers ten packs and two hours of support. The delivery estimate is 45 minutes per pack at a labor cost of $40 an hour. Software costs $100 per month for the business, not per customer. Sales, founder time, taxes, and other overhead are not included in these figures. Neither customer has completed or renewed the pilot. No evidence establishes demand outside these interviews and purchases.
Your response
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One model response
The estimated delivery is 9.5 hours, costing $380, so the $600 pilot contributes $220 before shared and indirect costs. That supports testing the price, but does not establish overall profitability. I would test actual time per pack first because slower delivery could consume most of the remaining contribution.
The response includes production and support rather than citing revenue alone.
Contribution and company profit remain distinct.
The proposed test targets a number that could change the price decision.
The model uses the available numbers to support a bounded commercial decision. It neither promises profitability nor refuses to act until every cost is known.
Review the performance
- EconomicsI include the promised delivery work.
- AccuracyI distinguish contribution from overall profit.
- JudgmentI identify a financially consequential assumption.
Choose one move to improve, revise your response, then try it aloud.
Common mistakes to avoid
- Omitting support from delivery cost.
- Calling the remaining contribution net profit.
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