Total cost per unit is from unit sales divided by total cost, which gives us to calculate the unit margin on a pitcher from gross margin minus total cost per unit. This means that after accounting for the cost of goods sold and the other costs (promotion and advertising), the company makes a profit of $1.47 per unit sold. In this case, each customer buys 2.5 filters per year, and the retention rate is 80%, so each customer buys 0.8 times 2.5, equal to 2 filters per year. Hence, it gives us the calculations for the two filters below. This figure represents the gross margin for two filters at $4.10. The total other cost for two filters is $1.31. To calculate the margin of 2 pitcher scale filters, subtract the total other costs from the gross margin: $4.10 minus $1.31 = $2.79, so the margin of $2.79 is the profit made on the sale of two pitcher filters after accounting for the cost of goods sold and other costs. This allows us to calculate the customer's lifetime value. If the retention rate is 80%, we can calculate an expected life-time value equal to 5 years. After that, it can be