Let's imagine you own a tennis club with two sources of revenue: one is the fee that people pay every year ($300 out of which the contribution margin is $200). Then people who come to the club spend on various things (balls drinks snacks). Contribution margin is $60. This is the M. Historically, 80% of the members rejoin each year. For the time being, let's look at a 4-year time horizon, then we'll expand. 

So, what is the expected profitability of an average customer? 

For simplicity, assume no interest rates. Let's calculate together, based on this information.

Answer rating: 100% (QA)

To calculate the expected profitability of an average customer over a 4year time horizon we need t... View the full answer