04 October 2016
Recently, I faced with a lack of understanding of how to calculate Gross Profit. The fact that it can be calculated in different ways, and some startups teams are confused in values. Let’s look at this point. How can we find GP?
our profit is the profit from each customer in the cohort, multiplied by the number of customers
GP = (ARPPU — CAC) x Buyers
Our profit is profit from each lead in the cohort, multiplied by the number of leads
GP = (ARPL — CPL) x Leads
Our profit is profit from each user in the cohort, multiplied by the number of users
GP = (ARPU — CPA) x UA
In addition, our users, customers and leads are connected by sales funnel
UA -> Cact -> Leads -> C -> Buyers
UA -> C1 -> Buyers
Cact — the conversion to user activation, when we get users data and it becomes lead.
С — the conversion of the first purchase, which makes the lead and become our client, and С1 — the conversion of the first purchase.
ARPU = ARPPU x C1
ARPL = ARPPU x Cact
ARPU = ARPL x C
ARPU = ARPPU x Cact x C
Well, remember that
CAC — customer acquisition cost.
CPA — cost per acquisition.
CPL — cost per lead.