Media outlets often have web sites that provide in-depth coverage of news and events. Portions of these
Question:
Media outlets often have web sites that provide in-depth coverage of news and events. Portions of these web sites are restricted to members who pay a monthly subscription to gain access to exclusive news and commentary.
These web sites typically offer a free trial period to introduce viewers to the web site. Assume that during a recent fiscal year, one outlet spent $3,793,160 on a promotional campaign for its web site, offering two free months of service for new subscribers. In addition, assume the following information:
Number of months an average new customer stays with the service | |
(including the two free months) | 22 months |
Revenue per month per customer subscription | $21 |
Variable cost per month per customer subscription | $7 |
Determine the number of new customer accounts needed to break even on the cost of the promotional campaign. Informing your answer, (1) treat the cost of the promotional campaign as a fixed cost, and (2) treat the revenue less variable cost per account for the subscription period as the unit contribution margin.
Introduction to Information Systems Supporting and Transforming Business
ISBN: 978-1118063347
4th edition
Authors: Kelly Rainer, Casey Cegielski