Improving Unit Economics: Revenue and Cost-to-Serve Levers to Lift Per-User Profit

Pick any product you know well and explain how you would raise the profit it makes per user. ```hint Profit is two numbers For the product you pick, separate what an average user brings in from what that user costs to serve, then ask which of those pieces has the most room to move without driving users away. ``` ### Clarifying Questions - May I pick any company's product, or should it be one of this company's products? - Should profit per user be measured per month, per year, or over a user's lifetime? - Does "user" mean every active user, free ones included, or only paying customers? - Are price changes in scope, or only product and cost changes? ### What a Strong Answer Covers - A product choice backed by a clear picture of how the product makes money and what each user costs to serve. - A breakdown of profit per user into revenue and cost drivers, with a reasoned view of which has the most room. - Prioritized levers on both the revenue and the cost side, each with its expected effect and its effect on users. - Metrics and a testing plan, with guardrails on retention, total profit and user trust. - How the plan avoids raising the ratio in ways that hurt the business or its users. ### Follow-up Questions - A price increase raises profit per user, but cancellations among paying users climb over the following months. How do you decide whether to keep it? - How would you test a price change without damaging trust with existing customers? - Leadership wants profit per user up this quarter, but your best lever pays off over two years. How do you make the case?