Reference no: EM133410432
Question: A website mynews.com offers curated news services for its subscribers. The subscription fee is $80 per year for each subscriber, and the attributed cost for serving each customer is $55 each year. The cost is assumed to be constant over the planning horizon. To evaluate the values of the customers who joined in January 2022, the customer analytics team conduct a series of
modeling exercises. Based on one model result, the existing customers have a retention rate of 70% each year. The company uses a discount rate of 5%.
a. How much is the gross profit of the subscription service for each customer per year?
b. What is the churn rate each year, based on the analytics team's modeling results?
c. In next year's dollars, what is the gross profit each customer is expected to generate in the next year?
d. In today's dollars, what is the gross profit one customer is expected to generate in the next year?
e. In today's dollars, calculate the CLV for the cohort of January 2022, for five years, until 2026.