Contribution margin per user
Contribution margin per user is revenue per user minus the variable costs of serving that user: delivery, payment fees, support, content or bandwidth, and any incentive granted. It is what a business actually keeps, and it is the honest denominator for judging an offer.
How it is calculated
CM per user = ARPU - Variable cost to serve per user
Discounts and incentives belong in variable cost. An ARPU win funded by margin is not a win.
Why it matters for ARPU
Optimising ARPU without margin produces revenue that costs more than it earns. Markin scores candidate actions on margin-aware value for exactly this reason.
Related terms
ARPUARPU, average revenue per user, is total revenue in a period divided by the average number of active users in that period.Payback periodPayback period is the time taken for the gross margin generated by a customer to repay the cost of acquiring them.Save offerA save offer is an incentive presented to a customer who is about to leave: a discount, a pause, a plan downgrade or a service remedy.Guardrail metricA guardrail metric is a measure an experiment must not damage even if the primary metric improves: unsubscribe rate, complaint volume, margin, support contacts, app uninstalls.