Elite Ballplayers (Party)

1 2 3 4 5 6 7 8
Contact Cost 12,500.00
Response Rate 25%
Acquisition Cost 50,000.00

Workers needed 1 1 1 1 1 1 1 1 1
Worker labor cost/hour 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500
Instructors needed 1 1 1 1 1 1 1 1 1
Instructor labor cost/hour 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500
Total cost/hr 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000

Price/hr 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00
Margin/hour 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00
Annual hour 20 20 20 20 20 20 20 20 20
Annual margin 30,000.00
Annual Profit -20,000.00 18000 10800 6480 3888 2333 1400 840 504
NPV Profit -20,000.00 16364 9818 5891 3535 2121 1272 763 458 75%
Cumulative Profit -20,000.00 -2,000 8,800 15,280 19,168 21,501 22,900 23,740 24,244
NPV of Cumulative Profit -20,000.00 -3,636 6,182 12,073 15,607 17,728 19,000 19,764 20,222
Retention rate 60% 36% 22% 13% 8% 5% 3% 2% 1%
Interest rate 10%

QUESTION 6
ANNUAL PROFIT 18000 9818 5355 2921 1593 869 474 259 141 77
CLV(60) 16364 8926 4869 2656 1448 790 431 235 128 70
Cumulative CLV 15916
30000
ANNUAL PROFIT -20000 15000 10227 6973 4754 3242 2210 1507 1027 701 478 326 222 151 103
CLV(70) -20000 13636 9298 6339 4322 2947 2009 1370 934 637 434 296 202 138 94
Cumulative CLV 22656
QUESTION 7-Acquisition Cost=77586
ANNUAL PROFIT 18000 9818 5355 2921 1593 869 474 259 141 77
CLV(60) 16364 8926 4869 2656 1448 790 431 235 128 70
Cumulative CLV 15916
Revenue 65916
Loss -11670

Elite Ballplayers (Party)

1 2 3 4 5 6 7 8 9 10 11 12 13
Contact Cost 12,500.00
Response Rate 25%
Acquisition Cost 50,000.00

Workers needed 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Worker labor cost/hour 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500
Instructors needed 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Instructor labor cost/hour 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500
Total cost/hr 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000

Price/hr 7,500.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00
Margin/hour 1,500.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00
Annual hour 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Annual margin 30,000.00 20000
Annual Profit -20,000.00 12000 9000 6750 5063 3797 2848 2136 1602 1201 901 676 507 380
NPV Profit -20,000.00 10909 8182 6136 4602 3452 2589 1942 1456 1092 819 614 461 346
Cumulative Profit -20,000.00 -8,000 1,000 7,750 12,813 16,609 19,457 21,593 23,195 24,396 25,297 25,973 26,480 26,860
NPV of Cumulative Profit -20,000.00 -9,091 -909 5,227 9,830 13,281 15,870 17,812 19,268 20,360 21,179 21,793 22,254 22,600
Retention rate 60% 45% 34% 25% 19% 14% 11% 8% 6% 5% 3% 3% 2% 1%
Interest rate 10%

An Elite Ballplayer(Party)(usual case)

YEAR 2
Annual margin ¥ 30,000.00
Retention rate 60.00%
Acquisition Cost
Annual Profit ¥ 18,000.00
NPV of Annual Profit ¥ 16,363.64

An Elite Ballplayer(Party)(brothers advice)

 Year 2
Annual Margin 20000
Retention 75.00%
Annual Profit 15000
Cumulative profit -5000
NPV of profit 13636.36364
 Elite Ballplayers (Party)1 2 3 4 5 6 7 8
Contact Cost 12,500.00
Response Rate 25%
Acquisition Cost 50,000.00
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 YEAR 11
Workers needed 1 1 1 1 1 1 1 1 1 1 1
Worker labor cost/hour 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500
Instructors needed 1 1 1 1 1 1 1 1 1 1 1
Instructor labor cost/hour 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500
Total cost/hr 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
Price/hr 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00
Margin/hour 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00
Annual hour 20 20 20 20 20 20 20 20 20 20 20
Annual margin 30,000.00
Annual Profit -20,000.00 18000 10800 6480 3888 2333 1400 840 504 302 0
9818 5355 2921 1593 869 474 259 141 77
NPV OF Profit -20,000.00 16364 8926 4869 2656 1448 790 431 235 128 70 75%
CLV 15,916
Retention rate 60% 36% 22% 13% 8% 5% 3% 2% 1%
Interest rate 10%

QUESTION 6
ANNUAL PROFIT 18000 9818 5355 2921 1593 869 474 259 141 77
NPV(60) 16364 8926 4869 2656 1448 790 431 235 128 70
CLV 15916
30000
ANNUAL PROFIT -20000 15000 10227 6973 4754 3242 2210 1507 1027 701 478 326 222 151 103
NPV(75) -20000 13636 9298 6339 4322 2947 2009 1370 934 637 434 296 202 138 94
CLV 22656
Maru’s brother’s advice of giving 500 yen discount gives more customer lifetime value of Elite softball players. Therefore this
strategy must be executed.
QUESTION 7-Acquisition Cost=77586
ANNUAL PROFIT 18000 9818 5355 2921 1593 869 474 259 141 77
CLV(60) 16364 8926 4869 2656 1448 790 431 235 128 70
Cumulative CLV 51832
Revenue 101832
Loss 24246
Assuming 100 ppl are
contacted we have 25
person turn rate 1295804 1250000
Assuming 100 ppl are
contacted we have 29
person turn rate as
mentioned in the
question 1503132
Maru’s strategy of giving a free bat for Elite softball players is also less profitable for the
batting center business in the long term.

Elite Ballplayers (Party)1 2 3 4 5 6 7 8 9 10 11 12 13

Contact Cost 12,500.00
Response Rate 25%
Acquisition Cost 50,000.00

Workers needed 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Worker labor cost/hour 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500
Instructors needed 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Instructor labor cost/hour 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500
Total cost/hr 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000

Price/hr 7,500.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00
Margin/hour 1,500.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00
Annual hour 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Annual margin 30,000.00 20000
Annual Profit -20,000.00 12000 9000 6750 5063 3797 2848 2136 1602 1201 901 676 507 380
NPV Profit -20,000.00 10909 8182 6136 4602 3452 2589 1942 1456 1092 819 614 461 346
Cumulative Profit -20,000.00 -8,000 1,000 7,750 12,813 16,609 19,457 21,593 23,195 24,396 25,297 25,973 26,480 26,860
NPV of Cumulative Profit -20,000.00 -9,091 -909 5,227 9,830 13,281 15,870 17,812 19,268 20,360 21,179 21,793 22,254 22,600
Retention rate 60% 45% 34% 25% 19% 14% 11% 8% 6% 5% 3% 3% 2% 1%
Interest rate 10%

An Elite Ballplayer(Party)(usual case)

YEAR 2
Annual margin ¥ 30,000.00
Retention rate 60.00%
Acquisition Cost
Annual Profit ¥ 18,000.00
NPV of Annual Profit ¥ 16,363.64

An Elite Ballplayer(Party)(brothers advice)

Year 2
Annual Margin 20000
Retention 75.00%
Annual Profit 15000
Cumulative profit -5000
NPV of profit 13636.36364
 Elite Ballplayers (Party)1 2 3 4 5 6 7 8
Contact Cost 12,500.00
Response Rate 25%
Acquisition Cost 50000
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 YEAR 11
Total cost/hr 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
Price/hr 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00 7,500.00
Margin/hour 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00
Annual margin 30,000.00
Annual Profit -20,000.00 18000 10800 6480 3888 2333 1400 840 504 302 0
NPV OF Profit -20,000.00 16364 8926 4869 2656 1448 790 431 235 128 70 75%
CLV 15,916
Retention rate 60% 36% 22% 13% 8% 5% 3% 2% 1%
Interest rate 10%

QUESTION 6
ANNUAL PROFIT 18000 9818 5355 2921 1593 869 474 259 141 77
NPV(60) 16364 8926 4869 2656 1448 790 431 235 128 70
CLV 15916
30000
ANNUAL PROFIT -20000 15000 10227 6973 4754 3242 2210 1507 1027 701 478 326 222 151 103
NPV(75) -20000 13636 9298 6339 4322 2947 2009 1370 934 637 434 296 202 138 94
CLV 22656
Maru’s brother’s advice of giving 500 yen discount gives more customer lifetime value of Elite softball players. Therefore this
strategy must be executed.
QUESTION 7-Acquisition Cost=77586
ANNUAL PROFIT 18000 9818 5355 2921 1593 869 474 259 141 77
CLV(60) 16364 8926 4869 2656 1448 790 431 235 128 70
Cumulative CLV 51832
Revenue 101832
Loss 24246
Assuming 100 ppl are
contacted we have 25
person turn rate 1295804 1250000
Assuming 100 ppl are
contacted we have 29
person turn rate as
mentioned in the
question 1503132
Maru’s strategy of giving a free bat for Elite softball players is also less profitable for the
batting center business in the long term.

Elite Ballplayers (Party)1 2 3 4 5 6 7 8 9 10 11 12 13

Contact Cost 12,500.00
Response Rate 25%
Acquisition Cost 50,000.00
Worker labor cost/hour 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500
Instructors needed 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Instructor labor cost/hour 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500
Total cost/hr 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
Price/hr 7,500.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00
Margin/hour 1,500.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00
Annual hour 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Annual margin 30,000.00 20000
Annual Profit -20,000.00 12000 9000 6750 5063 3797 2848 2136 1602 1201 901 676 507 380
NPV Profit -20,000.00 10909 8182 6136 4602 3452 2589 1942 1456 1092 819 614 461 346
Cumulative Profit -20,000.00 -8,000 1,000 7,750 12,813 16,609 19,457 21,593 23,195 24,396 25,297 25,973 26,480 26,860
NPV of Cumulative Profit -20,000.00 -9,091 -909 5,227 9,830 13,281 15,870 17,812 19,268 20,360 21,179 21,793 22,254 22,600
Retention rate 60% 45% 34% 25% 19% 14% 11% 8% 6% 5% 3% 3% 2% 1%
Interest rate 10%

An Elite Ballplayer(Party)(usual case)

YEAR 2
Annual margin ¥ 30,000.00
Retention rate 60.00%
Acquisition Cost
Annual Profit ¥ 18,000.00
NPV of Annual Profit ¥ 16,363.64

An Elite Ballplayer(Party)(brothers advice)

Year 2
Annual Margin 20000
Retention 75.00%
Annual Profit 15000
Cumulative profit -5000
NPV of profit 13636.36364
 Elite Ballplayers (Party) 1 2 3 4 5 6 7 8 9 10 11 12 13
Contact Cost 12,500.00
Response Rate 25%
Acquisition Cost 50,000.00
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 YEAR 11 YEAR 12 YEAR 13 YEAR 14 YEAR 15
Workers needed 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Worker labor cost/hour 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500
Instructors needed 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Instructor labor cost/hour 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500
Total cost/hr 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000

Price/hr 7,500.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00
Margin/hour 1,500.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00
Annual hour 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Annual margin 30,000.00 20000
Annual Profit -20,000.00 15000 11250 8438 6328 4746 3560 2670 2002 1502 1126 845 634 475 356
10227 6973 4754 3242 2210 1507 1027 701 478 326 222 151 103
NPV Profit -20,000.00 13636 9298 6339 4322 2947 2009 1370 934 637 434 296 202 138 94
CLV 22,656.06
Retention rate 75% 56% 42% 32% 24% 18% 13% 10% 8% 6% 4% 3% 2% 2%
Interest rate 10%
 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 YEAR 11 YEAR 12 YEAR 13
Annual margin 30000 30000 30000.0 30000.0 30000.0 30000.0 30000.0 30000.0 30000.0 30000.0 30000.0 30000.0 30000.0
Retention rate 100.00% 60.00% 36.00% 21.60% 12.96% 7.78% 4.67% 2.80% 1.68% 1.01% 0.60% 0.36% 0.22%
Acquisition Cost 60000
Annual Profit -30000 18000 10800 6480 3888 2333 1400 840 504 302 181 109 65
NPV of Annual Profit -30000 16364 9818 5891 3535 2121 1272 763 458 275 165 99 59
cummulative profit -30000 -12000 -1200 5280 9168 11501 12900 13740 14244 14547 14728 14837 14902

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 YEAR 11 YEAR 12 YEAR 13
Annual margin 30000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000
Retention rate 100.00% 60.00% 45.00% 33.75% 25.31% 18.98% 14.24% 10.68% 8.01% 6.01% 4.51% 3.38% 2.53%
Acquisition Cost 60000
Annual Profit -30000 12000 9000 6750 5063 3797 2848 2136 1602 1201 901 676 507
NPV of Annual Profit -30000 10909 8182 6136 4602 3452 2589 1942 1456 1092 819 614 461
cummulative profit -30000 -18000 -9000 -2250 2813 6609 9457 11593 13195 14396 15297 15973 16480
Without brothers advice(Elite Ball Players -Party)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15
Total Cost per hour 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000
Price per hour 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500 7500
Hourly Margin 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500
Annual Hours 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Annual Margin 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000
Acquisition Cost(with bat) 53104 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Retention 100.00% 60.00% 36.00% 21.60% 12.96% 7.78% 4.67% 2.80% 1.68% 1.01% 0.60% 0.36% 0.22% 0.13% 0.08%
Annual Profit -23104 18000 10800 6480 3888 2332.8 1399.68 839.808 503.8848 302.3309 181.3985 108.8391 65.30347 39.18208 23.50925
Cumulative profit -23104 -5104 5696 12176 16064 18396.8 19796.48 20636.29 21140.17 21442.5 21623.9 21732.74 21798.04 21837.23 21860.74
NPV of profit 16363.63636
8925.619835
4868.519912655.556314
1448.485262
790.0829 430.9543 235.066 128.2178 69.93699 38.14745 20.8077 11.34965 6.19072

With brothers advice(Elite Ball Players -Party)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15
Total Cost per hour 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000
Price per hour 7500 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000 7000
Hourly Margin 1500 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000
Annual hours 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Annual Margin 30000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000
Acquisition Cost 50000 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Retention 100.00% 75.00% 56.25% 42.19% 31.64% 23.73% 17.80% 13.35% 10.01% 7.51% 5.63% 4.22% 3.17% 2.38% 1.78%
Annual Profit -20000 15000 11250 8437.5 6328.125 4746.093753559.57 2669.678 2002.258 1501.694 1126.27 844.7027 633.527 475.1453 356.359
Cumulative profit -20000 -5000 6250 14687.5 21015.62525761.71875 29321.29 31990.97 33993.23 35494.92 36621.19 37465.89 38099.42 38574.56 38930.92
NPV of profit 13636.36364
9297.520661
6339.218633
4322.194522
2946.950811
2009.285 1369.967 934.0683 636.8647 434.226 296.0632 201.8612 137.6327 93.84045