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.

HardTechnical

49 practiced

Evaluate a $5/user/year loyalty program expected to reduce monthly churn from 6% to 4% and increase ARPU by 5%. For 50,000 paying users at $30/month, calculate the net annual ROI and the payback period for implementing the program. State assumptions and show sensitivity to churn estimates.

MediumTechnical

66 practiced

Three acquisition channels deliver paying customers with these stats: Paid Search — CAC $80, LTV $200; Organic — CAC $20, LTV $150; Referral — CAC $10, LTV $120. Calculate LTV:CAC for each channel, compute payback months if ARPU is $20/month and gross margin 70%, and recommend how to reallocate a fixed acquisition budget for sustainable growth.

MediumTechnical

55 practiced

Define Net Revenue Retention (NRR) and explain why it's a critical metric for SaaS growth. Given starting ARR $10M, expansion revenue +20% (upsells), contraction -5% (downgrades), and churn -10%, compute NRR and interpret the result.

MediumTechnical

67 practiced

A proposed feature will increase hosting costs by $0.50 per user per month but increase ARPU by $0.20. If current ARPU is $10 and gross margin is 85%, compute the change in contribution margin per user and explain whether the feature is justified purely on unit economics.

MediumTechnical

45 practiced

A new channel delivers lower conversion (1.5%) but higher-LTV customers (LTV $600) vs current channels (conversion 4%, LTV $300). What quantitative criteria—including conversion, LTV, CAC, and scale—would you use to evaluate adding the new channel and to decide budget allocation across channels?

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