Design cloud product packaging and pricing strategy
Overview
This question evaluates a candidate's product strategy and quantitative business competencies, including pricing and packaging design, unit economics, risk assessment, and the ability to communicate trade-offs to executives.
Capital One
Oct 13, 2025, 9:49 PM
Data Scientist
Technical Screen
Behavioral & Leadership
0
0
Cloud-Service Pricing and Packaging Case
Context
You are the first PM at a cloud-service startup that is functionally at parity with competitors but has a modest technical edge (e.g., faster sync). You must design pricing and packaging to maximize long-run profit while maintaining healthy unit economics.
Assumptions you may use to quantify decisions:
- Fixed cost (FC) ≈ $400/month for shared infra and tooling.
- Per-user service cost (COGS) ≈ 5/month depending on tier/usage.
- Product resembles a sync/backup/sharing service (storage + bandwidth + support).
Task
- Propose 2–3 concrete SKUs (e.g., Free/Pro/Business) with specific feature gates, storage caps, and SLAs. Justify choices using the cost structure above.
- Choose between unit-based pricing only vs tiered subscription (optionally with overage add-ons). State decision criteria and quantitative thresholds (e.g., target gross margin, bill predictability vs usage variance, minimum ARPU needed to cover VC and FC at current scale).
- Identify at least three major risks (e.g., free-tier abuse, adverse selection of high-usage users, bill shock, support/load scaling) and propose concrete mitigations for each (caps, throttling, bundling, annual plans, intro credits, or migration paths).
- The CEO demands to "increase market share." Define an actionable plan that does not worsen losses: specify CAC/LTV guardrails, conversion targets (minimum paid share to maintain break-even), and capacity constraints. Explain trade-offs and how you would monitor and adjust using unit-economic dashboards.
Solution
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