You're setting the price for a new product or tier. Walk me through how you'd arrive at the number.

role-specific · Mid level · product-management

What the interviewer is really asking

Test whether the candidate prices from customer value and willingness-to-pay with a deliberate packaging and metric choice, rather than defaulting to cost-plus or simply undercutting competitors.

What to say

• Anchor on the value delivered and the customer's willingness-to-pay, not your cost — research it directly through interviews, surveys (e.g. Van Westendorp), or segment-level value analysis.
• Choose the pricing metric and packaging deliberately: pick a value metric that scales with the customer's success (seats, usage, outcomes) and decide tiers around distinct customer segments and their jobs-to-be-done.
• Treat the launch price as a testable starting point with room to move — use competitor pricing as a reference frame, plan to monitor conversion and discounting, and remember raising price later is harder than lowering it.

What to avoid

• Price purely cost-plus — add a margin to your costs — with no reference to what the value is worth to the customer.
• Just undercut the main competitor by a fixed percentage as the whole strategy, racing to the bottom.
• Treat price as a permanent, one-time decision rather than something you set deliberately and then learn from.

Example answers

Strong: I price from value, not cost. For a new analytics tier I interviewed a dozen target customers and ran a willingness-to-pay survey, then quantified the value — it saved a data analyst roughly a day a week, worth well over our proposed price. I chose 'tracked data sources' as the value metric because it scaled with how much customers got out of it, set three tiers mapped to small/mid/enterprise jobs, and benchmarked against two competitors only as a sanity check. We launched a touch below where the survey peaked so we'd have room to raise it once we'd proven retention.

Weak: I'd add up our infrastructure and support costs, add a healthy margin, and that's the price.