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AI Product Metrics and LLM Cost

LLM Cost Modeling and Unit Economics Interview Questions

How to work out what an AI feature costs: cost per interaction from token counts, how RAG changes the cost structure, and monthly cost at scale. Expect calculation questions in AI PM and AI engineer interviews.

  • 25 questions with model answers
  • 2 foundational · 5 intermediate · 18 advanced

Foundational LLM Cost Modeling and Unit Economics Questions

  1. Build the cost-per-interaction model for a feature with a 2,000-token prompt and a 500-token response.Calculation
  2. What cost drivers exist for an AI feature beyond model tokens?Concept

Intermediate LLM Cost Modeling and Unit Economics Questions

  1. Explain how a RAG pipeline's cost structure differs from a single model call.Calculation
  2. Model the monthly cost of a feature used by 50,000 users averaging 12 interactions each.Calculation
  3. Explain the gross margin problem for AI products with flat-rate pricing.Concept
  4. Critique a cost model that ignores failed and retried requests.Artifact critique
  5. Describe how you would present unit economics to a CFO.Case

Advanced LLM Cost Modeling and Unit Economics Questions

  1. How does prompt caching change your unit economics, and when does it not help?Calculation
  2. What is the cost impact of moving from a single call to a five-step agent?Calculation
  3. Describe how you would find the most expensive one percent of your traffic.Case
  4. How do you model cost when a small share of users generate most of the usage?Calculation
  5. What levers reduce cost per interaction without reducing quality? Name five.Concept
  6. Describe the tradeoff between a cheaper model and more retries.Calculation
  7. How do embedding and re-embedding costs enter a RAG cost model?Calculation
  8. Build a sensitivity analysis for a cost model where token prices fall 40 percent.Calculation
  9. What is the cost of your eval and monitoring infrastructure relative to serving?Calculation
  10. Explain how routing between models affects blended cost.Calculation
  11. How would you set an internal cost ceiling per user and enforce it?Case
  12. Describe the hidden cost of context window growth over a long conversation.Calculation
  13. What is the economic argument for a smaller fine-tuned model over a large prompted one?Calculation
  14. How do you forecast cost for a feature with no usage history?Calculation
  15. Explain how self-hosting changes the cost curve and where the crossover point sits.Calculation
  16. What should you do when a single enterprise customer becomes unprofitable?Case
  17. How do you build cost guardrails into the product itself?Concept
  18. Walk me through the unit economics of an AI product I name.Interview

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