You should make the following assumptions in your responses:

• The annual discount rate is 10% (i = .10)
• DSC receives 100% of profits (p c) for its subscription sales and expects to receive 50% of the profits from indirect sales (unless noted otherwise)
• Account for acquisition costs in your calculations
• Acquisition costs are paid entirely by DSC in both channels

Please use the retention-based formulafor customer lifetime value (see CLV Tutorial file):

Table 1:Customer Lifetime Value Metrics for Direct and Indirect DSC Channels

Customer Group	Monthly revenues per customer (p)	Monthly costs per customer (c)	Monthly Purchases per Year (q)	Yearly Retention Rate (r)
Standard DSC Subscribers	$8.00	$4.50	12	83%
Indirect Channel Customers	$8.00	$2.50	12	79%

Profit shares in a retail channel are often negotiated on a case-by-case basis. Is a 50% profit share enough for the CLV per customer in the retail channel to match the subscription CLV for Dollar Shave Club?

The minimum profit share to match the direct channel is the value of X where the two channels' CLV's are equal.