The formula to calculate the Average Revenue (AR) is:
\[ AR = \frac{TR}{Q} \]
Where:
Let's say the total revenue (\( TR \)) is $50,000 and the total number of units sold (\( Q \)) is 1,000. Using the formula:
\[ AR = \frac{50,000}{1,000} \]
We get:
\[ AR = 50 \text{ $/unit} \]
So, the Average Revenue (\( AR \)) is $50 per unit.
Average revenue is defined as the ratio of total revenue to total units of sale. It helps in understanding the revenue generated per unit sold, which can be useful for pricing strategies and financial analysis.
Definition: Average revenue is the revenue earned per unit of output sold.
Formula: \( \text{Average Revenue} = \frac{\text{Total Revenue}}{\text{Quantity Sold}} \)
Example: \( \text{Average Revenue} = \frac{10000}{500} \)
Definition: Average annual revenue is the total revenue earned in a year divided by the number of years.
Formula: \( \text{Average Annual Revenue} = \frac{\text{Total Revenue}}{\text{Number of Years}} \)
Example: \( \text{Average Annual Revenue} = \frac{500000}{5} \)
Definition: Average revenue per unit is the revenue earned per unit of output sold.
Formula: \( \text{Average Revenue per Unit} = \frac{\text{Total Revenue}}{\text{Total Units Sold}} \)
Example: \( \text{Average Revenue per Unit} = \frac{20000}{1000} \)
Definition: Average revenue per user (ARPU) is the revenue generated per user or subscriber.
Formula: \( \text{ARPU} = \frac{\text{Total Revenue}}{\text{Number of Users}} \)
Example: \( \text{ARPU} = \frac{15000}{300} \)
