A minicase about a cloud service — not sure if it's a new one, I don't remember seeing it on the forum before.
The setup was a startup doing cloud services. We supposedly had our own advantage (I didn't quite catch what the advantage actually was, but personally I don't think it affected the rest of the questions much).
Q1: How would you structure the product offering? How would you generate profit?
Q2: The company decided to go with unit-based pricing. At this point the interviewer shared their screen with some data:
- Subscribers: 20 people
- Fixed cost: $400, Variable cost/user: $5
- Price per GB: $1
- Average GB/user: 15GB
- Question: find the monthly profit
Q3: Why are we operating at a loss?
Q4: If our user count doubled, would we break even?
Q5: How would you increase our market share?
Q6: Now there's a new pricing strategy: split users into free and paid (paid users are charged a fixed fee every month). The cost per user is $1 for free users and $5 for paid users, and the monthly fee charged is $54. Find what percentage of users need to be paid in order to break even.
Q7: Which strategy do you think is better? Why, and what are the risks?
I got Q6 wrong. The interviewer corrected me at the end, and then threw in an extra question based on my wrong answer — if the answer really were the wrong number I'd calculated, how many customers would be needed to break even?
Overall the experience was pretty good. I didn't know much about cloud services going in so I was a bit lost at first and asked several clarifying questions, but the interviewer was very patient.
Discussion
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