A cable company spends on average 600 to acquire a customer, Ask an Expert

Economics

A cable company spends on average $600 to acquire a customer. Annual maintenance costs per customer is $45; record-keeping and billing costs are $30 per customer per annum.

Price of the basic service package is $30 per month. Typically, 40 percent of the customers buy a premium package that costs $50 per month; 10 percent buy the super premium package that costs $80 per month.

Over time, 80 percent of customers remain with the company from one year to the next. Discount rate= 0.12

A. What is the average CLV fpr all customers?

B. What is the CLV of a super premium customer?

The given formula for CLV is:

CLV = m * r / (1+d-r) - AC(Acquisition Costs)

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91711435

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