A nutrition plan app has a subscription that costs $10/month. The following chart gives average historical renewal rates for subscribers based on how many months they have been a subscriber.

 

Month	1st	2nd	3rd	4th and above
Renewal rate	70%	80%	85%	90%

 

1. Create a graph showing the time it takes to recoup advertising expenditure (PP - Payback Period) relative to the cost of acquiring a single subscriber (CAC - Customer Acquisition Cost).

What assumptions did you make?

2. We ran an experiment in which we gave half of new users (chosen at random) the option to subscribe for a year instead of a month at a cost of $80. Make predictions for the results of the experiment  using the following chart:

 

Metric	Control (Only $10/month)	Test (Option between $10/month and $80/year)
Users in bucket	100,000	100,000
Monthly plan subscribers	14,000
Yearly plan subscribers	0
Revenue per user after 13 months
Refund rate (% users asking for refunds)

 

Try to make reasonable assumptions in coming up with answers and list the assumptions together with your answer.