Strategy question
You are a PM at YouTube. YouTube raised the price of YouTube Premium by 10%. After the change, 10% of its users unsubscribed. What would you do?
- Meta
- Strategy
- Hard
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What this question tests
Strategic response to a pricing-driven churn event, weighing revenue impact against long-term retention risk.
How to approach it
- Do the immediate math: a 10 percent price increase with 10 percent churn is roughly revenue-neutral short term, so the real question is long-term health.
- Segment the churned users: low-engagement subscribers unlikely to have stayed anyway, or high-value engaged users, since the implication differs.
- Investigate whether churn concentrated in a specific segment, such as price-sensitive regions or younger users.
- Evaluate options: hold the new price and focus on winning back or replacing churned users, or offer a targeted discount to price-sensitive segments.
- Consider the value proposition: assess whether churned users' complaints point to a perceived value gap versus the free tier, not price alone.
- Recommend monitoring win-back and new-subscriber trends for another cycle, while considering a lower-cost tier for price-sensitive segments.
What a strong answer includes
- Does the basic revenue-neutral math upfront, showing quantitative rigor before jumping to a reactive decision.
- Segments churned users by value and engagement, recognizing not all churn is equally costly to the business.
- Considers a tiered pricing response rather than a blanket reversal, a more nuanced strategic option.
- Investigates the underlying value perception issue, not just treating this as a pure pricing problem.
Common mistakes
- Reacting with an immediate price rollback without first assessing whether this is actually revenue-neutral or positive.
- Treating all churned users as equally valuable, ignoring segmentation.
- Not considering the underlying value proposition question of why users found the new price not worth it.
Likely follow-up questions
- How would you decide whether to introduce a lower-cost subscription tier?
- How would you measure whether the churned users come back over time?
- What would you do if churn continued to rise in the following months?
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Learn the skill behind it
Chapters of the AI PM course that teach what this question tests.
- Chapter 4: Discovery and strategy for AI products
- Chapter 9: Prove it paid off: outcomes, economics, and pricing
- Chapter 14: Get the job: the AI PM interview loop