Market estimation: how to react if uncertain of the revenue source?

Question

In my previous interview, I didn't do well in market estimation. I got a credit card market estiamation question and case (possibly since I've worked in commercial banking before). When doing the estimation, the revenue source of credit card that came to my mind was "transaction fee". I didn't know "interest rate" was actually the major revenue source until the interviewer told me that after a few hints.

My problem is: is it okay to "clarify" the revenue source with the interviewer, especially if the interviewer expects you to be familiar with this industry? What would be an elegant and diplomatic way of phrasing the question and driving the process? Thank you.

Answer 1

Hi there,

Definitely better to clarify revenue streams upfront rather than guessing or missing an important one.

If you are not sure, you may phrase like this: “My understanding is that the main revenue streams in this industry are X and Y. Would it be fine if we consider only them or should we also add additional ones?”

Best,

Francesco

Answer 2

Hi there,

100% yes! The name of the game in casing/market sizing is clarification! We cannot make assumptions here!

Secondly, you need to incorporate structure. As in, you should have recognized that the market estimate would have to be done across each of their revenue sources. You should clarify what you understand to be the main sources, articulate how each would be calculated, and then pause for feedback!