A video game company that charges $15 per year for a game subscription is thinking of increasing the subscription price to $25. The company believes that it will reduce its initial customer base by 30% with this subscription increase. They’ll only retain 30% of their customers in the second year and of those who stay, 60% will remain customers in their third year. Company data shows that it costs $5 each year to service a customer, and the discount rate is 10%. What is their 3-year CLV with the price increase?

 
 
 
 
 
 

Yes! The 3-year CLV with this price increase is $19.90.

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