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Medium Revenue maximization

Don't Break the Bank

#Financial Services #Credit Cards
ProHub Comment

This is a structured revenue optimization case requiring candidates to analyze customer demand elasticity across two segments and multiple revenue streams (APR, merchant fees, annual fees). The case tests quantitative modeling skills, business intuition about pricing trade-offs, and strategic thinking about risk versus return—particularly relevant for financial services.

Estimated Time 15 minutes
Difficulty Medium
Source Duke
50 / 100
Our client, Hudson Bank, is an online bank that plans to launch a new credit card product within the next six months. They have asked us to help them determine a pricing model that will maximize their revenues.

Clarifying Information

  1. Two core customer segments: Transactors and Revolvers. Transactors pay off their entire credit card balance each month, whereas Revolvers leave a balance remaining month to month
  2. Our client generates credit card revenue three ways: 1) Merchant Fee, 2) Annual Percentage Rate (APR), and 3) Annual Fee
  3. If the interviewee asks about costs, mention that the cost structure is the same regardless of the pricing strategy, so the interviewee should focus on revenues
  4. Competition is very strong in this space, so finding the right pricing strategy is critical
  5. Our client offers other lending products such as personal and student loans; however, our sole focus is around their new credit card product