---
title: What is Contribution margin per user?
url: https://markin.ai/glossary/contribution-margin-per-user
category: Revenue and ARPU metrics
---

# 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

- [ARPU](https://markin.ai/glossary/arpu), ARPU, average revenue per user, is total revenue in a period divided by the average number of active users in that period.
- [Payback period](https://markin.ai/glossary/payback-period), Payback period is the time taken for the gross margin generated by a customer to repay the cost of acquiring them.
- [Save offer](https://markin.ai/glossary/save-offer), A 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 metric](https://markin.ai/glossary/guardrail-metric), A 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.

## Go deeper

- [ROI calculator](https://markin.ai/roi-calculator), Margin-aware ARPU modelling.
- [Growth optimization](https://markin.ai/solutions/growth-optimization), Optimising value, not just conversion.

Source: https://markin.ai/glossary/contribution-margin-per-user