WithWithoutCC
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ASSUMPTIONS
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Costs to serve a user in 30-day trial$3.00All costs, including bandwidth and pre-sales support
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Gross profit per customer per month$17.00
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Visitor-to-signup conversion
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Visitors who sign up either way (=Group 1)4.00%
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Visitors who sign up ONLY if no CC required (=Group 2)2.00%
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Trial-to-paying conversion
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Group 1, if CC was required25.00%Baseline conversion rate
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Group 1, if CC was not required20.00%Presumably somewhat lower than baseline because users are less "invested" in case B and some users forget to cancel in case A
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Group 2, if CC was required-
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Group 2, if CC was not required10.00%Presumably significantly lower than baseline because Group 2 users include more tire kickers
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Churn
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Monthly churn in month 1-3 if CC was required8.00%Higher because users who forgot to cancel within the trial will now cancel
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Monthly churn in month 1-3 if CC was not required4.00%
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Monthly churn in month 4+ if CC was required2.50%
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Monthly churn in month 4+ if CC was not required2.50%
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MODEL RESULTS
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Case ACase B
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CC requiredNo CC required
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Visitors10,00010,000
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Signups
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Signups from Group 1400400
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Signups from Group 20200
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Total Signups400600
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Total Visitor-to-Signup Conversion4.00%6.00%
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Paying Customers
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Paying Customers from Group 110080
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Paying Customers from Group 2020
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Total Paying Customers100100
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Total Signup-to-Customer Conversion25.00%16.67%
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Total Visitor-to-Customer Conversion1.00%1.00%
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Lifetime Value
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Gross Profit from month 1-3$4,703$4,899
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Number of customers in month 478 88
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Gross Profit from month 4$52,951$60,162
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Total Gross Profit$57,654$65,061
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Total 30-day-trial support costs$1,200$1,800
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Net total$56,454$63,261
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