What is Average revenue per subscriber?

ARPS, in eCommerce, is a valuable metric which helps online businesses assess the value of each subscriber and their contribution to revenue generation over a specific period of time. This metric, which falls under subscription model businesses, indicates the success rate of subscription sales by tracking the average income produced per subscriber.

Formula

Average Revenue Per Subscriber (ARPS) = Total Revenue / Total Number of Subscribers

Example

• Let’s say an online fitness platform has a total of 200 subscribers, and it generates $20,000 in a particular month. The ARPS would be:
• $20,000 / 200 = $100. This means the fitness platform’s ARPS is $100.

Why is ARPS important?

ARPS helps businesses evaluate the effectiveness of their sales strategies, allowing them to identify areas of improvement or identify successful strategies. By understanding the economic value for each subscriber, businesses can make informed decisions on customer acquisition costs, budgets, forecasting, and overall business profitability.

Which factors impact ARPS?

Several factors can influence ARPS. Seasonality of products, variations in customer shopping behavior, subscription pricing, promotional offers, competition, and the business’s overall marketing and sales effectiveness can all impact ARPS.

How can ARPS be improved?

Improving ARPS can be achieved through various strategies. Offering high-value, premium subscriptions or upselling products can increase subscriber spending. Subscriber retention should also be a priority, since loyal subscribers tend to generate more revenue over time. Utilizing promotional campaigns, personalized content and superior customer service can also enhance ARPS.

What is ARPS’s relationship with other metrics?

ARPS is closely linked with several other eCommerce metrics. For example, the lifetime value of a subscriber (LV) and the cost of customer acquisition (CCA). Low ARPS can impact the LV and may imply that CCA is too high. ARPS along with customer churn rate can guide businesses towards improving customer retention strategies. Therefore, understanding ARPS can yield significant insights for strategic business planning.