Business, 03.07.2020 17:01 sammielucero

Western Athletic Club International (WACI) owns and operates a chain of fitness clubs and is interested in estimating the CLV for new memberships. Practically all of WACI's costs are fixed costs. Meaning that, when a member pays his or her monthly dues, there are no variable costs associated with that payment and all the revenues go toward covering the fixed costs of the business (facilities, salaries, equipment, etc.) WACI's monthly membership dues are $73 per person. The average member keeps his or her membership active for 21 months. In addition to membership, WACI also offers personal training services through a staff of independent athletic trainers. WACI and the trainer split the fees associated with personal training 50/50. Historically, 22% of members choose to use a personal trainer for, on average, 18 training sessions. Sessions with a personal trainer are priced at $70 each.

Required:
a. What is the monthly margin generated by a new membership (don’t include training)?
b. What is the CLV to WACI on the membership component?
c. What is the CLV of the personal training component for a member who chooses to hire a trainer?
d. What is the total CLV for a new member?
e. What would be the net value of implementing a program that doubled the likelihood that a person would hire a personal trainer?

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Western Athletic Club International (WACI) owns and operates a chain of fitness clubs and is interes...

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