Grow a Kota study-planning product
Before the decision
Students use the free scheduler heavily around mock exams, then usage drops. The founder can demonstrate high engagement during exam preparation. Institutes ask for evidence that students use the product across the term before agreeing to a licence.
The problem
Should the team choose Institute licence or Direct paid plan for the next 12 months?
Decision owner: The business unit lead.
Institutes buy centrally but students can ignore mandated tools.
Option economics
Scroll the table to see all figures.
| Option | Volume (learner-months) | ₹ per unit | Fixed cost | Net contribution |
|---|---|---|---|---|
| Institute licence | 74,000 | 155 | ₹71 lakh | ₹43.7 lakh |
| Direct paid plan | 51,000 | 215 | ₹59 lakh | ₹50.65 lakh |
Make the call
- Calculate net contribution for Institute licence and Direct paid plan. Which assumption makes the comparison most fragile?
- If the leading option delivers 10% fewer learner-months, does your recommendation change?
- What evidence would you ask for before the team makes an irreversible commitment?
Reveal the worked solution
Start by validating Direct paid plan. It contributes ₹50.65 lakh after fixed costs and leads by ₹6.95 lakh. Treat that gap as the amount of unmodelled cost or lost contribution the option can absorb before the ranking reverses.
- Frame the decision
Separate sales that are incremental from sales shifted out of an existing channel. Include the support and fulfilment needed to keep new customers.
- Calculate both options
Institute licence: 74,000 learner-months × ₹155 less ₹71 lakh in fixed costs gives ₹43.7 lakh. Direct paid plan: 51,000 learner-months × ₹215 less ₹59 lakh in fixed costs gives ₹50.65 lakh.
- Stress-test the forecast
Direct paid plan leads by ₹6.95 lakh in the base case. If Direct paid plan delivers 10% fewer learner-months (45,900) at the same margin and fixed cost, it contributes ₹39.69 lakh. Holding the other option constant, the stressed result falls behind. This isolates volume risk. Check whether both options would respond to the same change in demand.
- Set a decision threshold
Holding the other option’s result fixed, Direct paid plan needs at least 47,768 learner-months to match or beat it under the model. Track weekly use through a complete test cycle and compare renewal intent.
Institutes buy centrally but students can ignore mandated tools. Compare the cost of a limited test with the loss the business would face if the full commitment failed. Ask the team to agree the decision criterion before collecting more evidence.
What if the whole market moves?
The worked solution tests a change to one option at a time. Here, both options gain or lose the same percentage of volume. Unit contribution and fixed costs stay constant.
| Volume scenario | Institute licence | Direct paid plan | Higher contribution |
|---|---|---|---|
| Both lose 10% of volume | ₹32.23 lakh | ₹39.69 lakh | Direct paid plan |
| Base assumptions | ₹43.7 lakh | ₹50.65 lakh | Direct paid plan |
| Both gain 10% of volume | ₹55.17 lakh | ₹61.62 lakh | Direct paid plan |
Explain which option you would take forward. Check whether capacity, price or customer mix would also change as the market moves.