Question

A company has 100,000 subscribers. There are 3
types of subscription: a $99 version, a $350
version and a $1000 version. The first group gives
50% of the customers, the second gives 30%, and
the third gives 20%. The average subscription
expectancy is 1 year for the low-price package, 3
year for the medium priced package and 5 years
for the high priced package. The average cost of
capital for the company is 10%.
• What is the average customer value of each type?
• What is the value of the customer base?

Answer 1

A company has 100,000 subscribers.

There are 3 types of subscription:
a $99 version, 50% - 50k 1 yr = 4,950,000
a $350 30% - 30 k - 3 yrs = 10,500,000
a $1000 version. 20% - 20k - 5 yrs = 20,000,000
----------------
total income: 35450000

The first group gives 50%
of the customers,
the second gives 30%,
and
the third gives 20%.

The average subscription
expectancy is 1 year for the low-price package,

3 year for the medium priced package and 5 years
for the high priced package.

The average cost of capital for the company is 10%. = 3,545,000


• What is the average customer value of each type?


• What is the value of the customer base? 35,450,000?