The objective of this exercise is to use CLV and BEP to price under different assumptions and the come

out with a recommenda

Please answer the three problems in the three problem spread sheets, where Problem 3 is your recommendation.
he come out with a recommendation.
ur recommendation.
BEP Pricing: Solve for price for different break-even times, under the assumption of $120 acquisition cost and 200 monthly usa
For CLV assume i=5% annually, churn is 4% monthly, AC=120, 45% cost to serve
Breakeven Time Price Margin CLV
(Months) 10-points
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
120 acquisition cost and 200 monthly usage

Annual Retention 0.48

Margin yearly 264
Interest 0.05
AC 370

498
LTV 128
CLV Pricing: Assuming monthly usage of 200 minutes, 45% cost to serve, and acquisition cost of $120 calcuate price for CLV giv
Further assume i=5% annually and churn rates of 2%, 4% and 5% monthly
CLV Price-2% churnBEP-2% Price-4% BEP-4% Price-5% BEP-5%
150
200
250
300
350
400
450
500
550
600
650
$120 calcuate price for CLV given below. Also report corresponding BEPs in months.
10-points
So what price will you recommend to Virgin? Please justfy your recommendation. 5-points