Practice — Long-Term Value & Delayed Reward Systems (5 questions)

A subscription product has 4,000,000 active subscribers, average monthly margin $12/subscriber, monthly churn currently 6%, and the company discounts future cash flow at 1.5%/month.

1. Compute current LTV per subscriber.
2. A proposed onboarding-flow redesign is projected to reduce monthly churn to 5.3% but will cost an estimated $2.1M to build and requires a small ongoing $150K/month support cost. Compute the new LTV per subscriber and determine whether the redesign is worth building, showing your reasoning (state any assumption about payback horizon).
3. A separate proposal instead focuses on raising average margin from $12 to $12.60 (a pricing change) with no effect on churn. Compute its LTV impact per subscriber and compare the two proposals. Which lever is more sensitive to a 5% relative change, and why does that matter for how you'd prioritize future experiments?