Business Metrics and Unit Economics Questions

Evaluate a candidates ability to analyze the financial drivers and per customer economics that determine business sustainability and growth. Core concepts include revenue streams and pricing, gross margin, contribution margin, operating margin, customer acquisition cost, lifetime value per customer, lifetime value to customer acquisition cost ratio, payback period, average revenue per user, churn and retention rates, and metrics for subscription or recurring revenue models such as annual recurring revenue, monthly recurring revenue, expansion revenue, and contraction effects. Candidates should be able to perform back of the envelope calculations and sensitivity analysis, interpret trade offs between growth and profitability, link marketing product and channel activities to financial outcomes, explain how metrics vary by customer segment or acquisition channel, and make strategic recommendations such as pricing adjustments, segmentation strategies, acquisition channel shifts, or investment versus efficiency decisions. Interviewers may request simple calculations, scenario analysis, and prioritized actions grounded in metric changes.

EasyTechnical

54 practiced

Explain the difference between gross margin and contribution margin. Given: revenue per customer = $100, COGS per customer = $30, variable cost per customer = $10, and fixed operating costs = $20 (not allocated per customer), compute gross margin % and contribution margin per customer. Explain when each metric is useful.

MediumTechnical

51 practiced

Forecasting: Given 24 months of historical monthly MRR, describe a practical approach to forecast MRR for the next 12 months. Which models would you try (e.g., ETS, ARIMA, Prophet, TBATS), how would you evaluate and select models, how would you incorporate seasonality and known future events (product launches), and how would you present uncertainty to stakeholders?

MediumTechnical

56 practiced

Pricing elasticity: In an A/B test, 10% of users saw price $10 and 90% saw $12. Conversion rates: 5% for $10, 4.2% for $12. Estimate price elasticity of demand between these two prices and determine which of the two prices generates higher expected revenue per visitor. Show calculations and assumptions.

EasyTechnical

80 practiced

Explain Customer Acquisition Cost (CAC). List the typical spend categories you'd include (e.g., ad spend, creative, agency fees, sales commissions, onboarding) and explain methods to allocate shared costs (overhead, brand spend) across channels or cohorts when computing CAC per channel.

MediumTechnical

64 practiced

Describe how you'd compute cohort-based retention rates by signup month for the first 12 months (cohort analysis). Provide a high-level SQL or pandas approach/pseudocode, and explain how you'd handle reactivations, users with intermittent activity, trial-to-paid conversions, and users who have incomplete observation windows.

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