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

55 practiced

Define churn rate and retention rate. Given: start-of-month customers = 1,000; new customers acquired during month = 100; customers lost = 120 by month-end. Compute the monthly churn rate using a standard formula, explain your chosen denominator, and show how retention rate is reported.

MediumTechnical

66 practiced

You are evaluating per-user pricing ($10/user/mo) versus a flat-fee $500/mo for teams. How would you model revenue and customer value across segments (small teams vs large orgs), calculate break-even team size for flat-fee, and discuss churn sensitivity and sales implications for each model?

HardTechnical

62 practiced

Design a prioritization framework for roadmap items focused on improving unit economics. Include a scoring formula that combines estimated LTV uplift, CAC reduction, development cost, and probability of success. Demonstrate scoring and ranking for three sample features with different cost/impact profiles.

EasyTechnical

48 practiced

As a product manager preparing a short executive brief, define Customer Acquisition Cost (CAC) and Customer Lifetime Value (LTV). Explain why the LTV:CAC ratio matters for business sustainability, give a simple rule-of-thumb threshold, and mention common pitfalls when calculating each.

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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