Can we earn money from this website.inspite of using purchase monthly or yearly subscription
Can we earn money from this website.inspite of using purchase monthly or yearly subscription
Related questions
Break-Even Analysis
Media outlets often have websites that provide in-depth coverageof news and events. Portions of these websites are restricted tomembers who pay a monthly subscription to gain access to exclusivenews and commentary.
These websites typically offer a free trial period to introduceviewers to the website. Assume that during a recent fiscal year,one outlet spent $3,310,560 on a promotional campaign for itswebsite that offered two free months of service for newsubscribers. In addition, assume the following information:
| Number of months an average newcustomer stays with the service (including the two free months) | 21 months |
| Revenue per month per customersubscription | $33 |
| Variable cost per month percustomer subscription | $11 |
Determine the number of new customer accounts needed to breakeven on the cost of the promotional campaign. In forming youranswer, (1) treat the cost of the promotional campaign as a fixedcost, and (2) treat the revenue less variable cost per account forthe subscription period as the unit contribution margin.
accounts
Headlines Publishing Company (HPC) specializes in internationalbusiness news publications. Its principal product isHPC-Monthly, which is mailed to subscribers the first weekof each month. A weekly version, called HPC-Weekly, isalso available to subscribers over the Web at a higher cost. Sixtypercent (60%) of HPC's subscribers are international customers. Thecompany experienced a fast growth in subscribers in its first fewyears of operation, but sales have begun to slow in recent years asnew competitors have entered the market. HPC has the following coststructure and sales revenue for its subscription operations on ayearly basis. All costs and all subscription fees are in U.S.dollars.
Fixed Cost | |
$306,000 per year | |
Variable Costs | |
Mailing | $0.60 per issue |
Commission | 3.00/subscription |
Administrative | 1.50/subscription |
Sales-Mix Information (based on volume) | |
HPC-Weekly | 20 percent |
HPC-Monthly | 80 percent |
Selling Price | |
HPC-Weekly | $47/subscription |
HPC-Monthly | $19/subscription |
Required:
Use these data to determine the following:
1. Contribution margin per unit for weekly and for monthlysubscriptions.
2. Contribution margin ratio for weekly and for monthlysubscriptions. (Round answers to two decimal points.) 3. HPC'sbreakeven point in annual sales units and sales dollars (roundanswers up, to nearest whole number). 4. HPC's required sales toreach a target before-tax profit (ĆĀB) of $75,000 for the year. Whatis the breakdown
of this overall level of subscriptions into Weekly and Monthlysubscriptions? (Round answers up to nearest whole number.)
5. What are the critical success factors for HPC? For its domesticsubscribers? For its international subscribers? How can CVPanalysis be used to make HPC more competitive?
