• The average cost of an Optus plan is $50 per month per customer;
• Variable costs are about $5 per month per customer;
• Retention/marketing spending is approximately $10 per trimester per customer;
• Churn or attrition rate has been estimated to be 1% a month;
• The monthly discount rate is 2%;
• Billing is at the beginning of the month.

Attempt the following questions and sub-questions for discussion in next week's lecture:

1. What is the CLV for an average customer at Optus?
2. Assume that the company decides to charge customers at the end of the month. How would this change the CLV for Optus?
3. Now, assume that retention increases and the retention rate goes up by 0.03%:
   1. How does the discount rate change?
   2. How does the long term multiplier change?
   3. How does the short-term margin change?
   4. How does the CLV change?
4. What are some of the potential challenges in the application of the CLV formula for a company like Optus?