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Please show the work as Im trying to learn the concept Jacob has written a game app that has been accepted by the iTunes App
Please show the work as Im trying to learn the concept
Jacob has written a game app that has been accepted by the iTunes App Store. The app will sell for $4.99, and it is expected to attract 999 users when it is introduced. While not absolutely necessary, app users can purchase items and extra powers, such as the ability to speed up the growth of a potent substance that can be used to defeat enemies, at an additional cost. It is estimated that 636 of the original 999 users will spend $7.05 each in the month after the purchase. In the following three months, a slight drop in the initial users is anticipated, but the remaining group is expected to spend more to purchase additional items and extra powers. If Jacob spends nothing on remarketing costs, it is assumed that the app will play itself out after six months-i.e., none of these users will continue to play unless Jacob commits to spending something on remarketing, which he does not plan to do, believing that the life cycle of the app is probably six months. Jacob will earn a profit margin of 82% on all sales. Estimate the CLV for an average customer using the "cohort and incubate method, assuming a monthly discount rate of 1% and the projected monthly sales provided below: Period Number of Customers Avg. Revenue/Customer 0 1 2 3 4 5 6 999 636 450 250 100 150 25 $4.99 $7.05 $8.00 $6.25 $5.15 $4.50 $3.00 Jacob has written a game app that has been accepted by the iTunes App Store. The app will sell for $4.99, and it is expected to attract 999 users when it is introduced. While not absolutely necessary, app users can purchase items and extra powers, such as the ability to speed up the growth of a potent substance that can be used to defeat enemies, at an additional cost. It is estimated that 636 of the original 999 users will spend $7.05 each in the month after the purchase. In the following three months, a slight drop in the initial users is anticipated, but the remaining group is expected to spend more to purchase additional items and extra powers. If Jacob spends nothing on remarketing costs, it is assumed that the app will play itself out after six months-i.e., none of these users will continue to play unless Jacob commits to spending something on remarketing, which he does not plan to do, believing that the life cycle of the app is probably six months. Jacob will earn a profit margin of 82% on all sales. Estimate the CLV for an average customer using the "cohort and incubate method, assuming a monthly discount rate of 1% and the projected monthly sales provided below: Period Number of Customers Avg. Revenue/Customer 0 1 2 3 4 5 6 999 636 450 250 100 150 25 $4.99 $7.05 $8.00 $6.25 $5.15 $4.50 $3.00Step by Step Solution
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