Bug Impact on Commission and Admin Costs (Jan–Mar)

Context and Assumptions

• The company earns commission revenue on user spend; an admin fee is a company cost.
• Registration determines commission rate and admin cost applicability:
  • Registered: 2% commission rate; $1.25/month admin cost (company cost).
  • Unregistered: 1% commission rate; $0 admin cost.
• Average monthly spend:
  • Premium user: $625
  • Regular user: $500
• During Jan 1–Mar 31, a bug causes:
  1. Premium users who cancel remain registered.
  2. New Premium users are not registered.
• Volumes each month: 400 Premium users cancel; 2,000 new Premium users join.
• Cohorts persist as described until a fix on April 1:
  • January cancelers remain registered for Jan–Mar (3 months).
  • February cancelers: Feb–Mar (2 months).
  • March cancelers: Mar (1 month).
  • January joiners are unregistered for Jan–Mar (3 months); February joiners for 2 months; March joiners for 1 month.
• Upon cancellation, users behave as Regulars ( $500/month spend). New joiners behave as Premiums ($ 625/month spend).

Task

Compute the net profit impact over the three months (Jan–Mar) versus correct functioning, itemizing revenue and cost deltas for each cohort and giving the total dollar impact.