Break-Even Analysis

Media outlets often have websites that provide in-depth coverage of news and events. Portions of these websites are restricted to members who pay a monthly subscription to gain access to exclusive news and commentary.

These websites typically offer a free trial period to introduce viewers to the website. Assume that during a recent fiscal year, one outlet spent $1,736,640 on a promotional campaign for its website that offered two free months of service for new subscribers. In addition, assume the following information:

Number of months an average new customer stays with the service (including the two free months)	27 months
Revenue per month per customer subscription	$18
Variable cost per month per customer subscription	$6

Determine the number of new customer accounts needed to break even on the cost of the promotional campaign. Informing your answer, (1) treat the cost of the promotional campaign as a fixed cost, and (2) treat the revenue less variable cost per account for the subscription period as the unit contribution margin.