How would you evaluate the ROI of a product investment before building it?
Model answer
Model answerROI estimation before building is inherently uncertain — which is fine as long as you're honest about that. I'd build a simple model: expected reach × conversion lift × revenue per conversion, minus estimated build cost. Then I'd identify the biggest assumptions driving the model and stress-test them: what if reach is half what we think? If the investment only makes sense in the best-case scenario, it's too risky. I'd also consider opportunity cost: what are we not building if we do this?
Framework · ROI
- MSimple model first
Reach × conversion lift × revenue per user = expected return. Subtract build cost - AIdentify key assumptions
What are the 2–3 inputs that drive 80% of the outcome? Stress-test those - SStress-test scenarios
Best, expected, worst case. If only best case works, too risky - OOpportunity cost
What are you not building? The ROI of the alternative matters too
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