How do product mangers calculate ROI to prioritize features at Amazon? Which are the most important factors?
LOL! I've been asking the same question for over five years.
What’s the answer?
Mainly the VP chooses projects for the year in planning and a crazy timeline to complete that project. Then everyone runs towards that date. For the interview start with the data and end user. Amazon LPs “data driven decisions” and “customer obsession”
Use labour hours as a proxy for investment as SW development cost can be amortized over a fixed duration. Estimate revenue increase per feature. Revenue - Cost = Gross margin. Everything else being the same, prioritize features based on revenue timeline / market opportunity. This should be quick enough for a 5 minute answer.
Who’s gonna pay for servers and power? Your mom?
Is the bill going to be different if they prioritize one feature over the other? Focus on variable costs
Basically pull some numbers out of your ass and call it the base case. Then reduce everything by 10% and call it worst case. Then increase everything by 10% and call it the best case. Then plot all of those on a chart. Congrats. You are a PM now!
Use a simple framework like ICE Impact Confidence Effort You won’t do great first time you use it but over a 2 year period you will begin to see how good it is. Google it.
Usually the PM works with finance to forecast the return or a VP looks at the competitors and decides to build something to stay competitive.
This is for an interview. So I have to give a concrete answer.