Calculating ARPC
Average Revenue Per Customer (ARPC) is a metric that measures the average revenue generated from each customer per month, quarter, or year. While similar to customer lifetime value, it differs in that ARPC is a way to measure the overall health of a business on an ongoing basis. Calculating ARPC is straightforward, and it can help businesses identify their most profitable products or services.
To calculate ARPC, simply divide your total revenue by the number of customers you have.
ARPU = Total Revenue / # of Users
This will give you an average revenue per customer. If your company offers different products or services, you can calculate the ARPC for each one to determine which is the most profitable.
Calculating different metrics
It’s important to note that different types of companies need to calculate different metrics. If your company sells a subscription or uses software, you must calculate the average revenue per user (ARPU) instead of ARPC. On the other hand, if your company sells physical products, you’ll need to calculate the average revenue per unit (ARPU).
ARPU = total revenue / # of units sold
Focus on profitable products or services
Understanding ARPC can help businesses focus on their most profitable products or services and identify areas that need improvement. By focusing on the most profitable products or users, a company can maximize its profits and work toward long-term success.