ARPU vs COGS
ARPU (Average Revenue Per User) and COGS (Cost of Goods Sold) both come up in business conversations and get confused. Here's the plain-English difference, side by side, so you can use each one with confidence.
The key difference: ARPU refers to average revenue per user, while COGS refers to cost of goods sold — they describe different things even when they show up in the same sentence.
ARPU — Average Revenue Per User
Total revenue divided by total active users over a period. ARPU shows how much each customer is worth on average.
COGS — Cost of Goods Sold
The direct costs of producing the goods or services a company sells, including materials and direct labor. COGS is subtracted from revenue to calculate gross profit.
When to use ARPU
Reach for "ARPU" when the conversation is specifically about average revenue per user. Total revenue divided by total active users over a period. ARPU shows how much each customer is worth on average.
When to use COGS
Reach for "COGS" when the conversation is specifically about cost of goods sold. The direct costs of producing the goods or services a company sells, including materials and direct labor. COGS is subtracted from revenue to calculate gross profit.
FAQs
What is the difference between ARPU and COGS?
ARPU stands for Average Revenue Per User — Total revenue divided by total active users over a period. ARPU shows how much each customer is worth on average. COGS stands for Cost of Goods Sold — The direct costs of producing the goods or services a company sells, including materials and direct labor. COGS is subtracted from revenue to calculate gross profit.
Are ARPU and COGS the same thing?
No. They're often used in the same conversation because they're related, but they describe different concepts. ARPU = Average Revenue Per User. COGS = Cost of Goods Sold.
When should I use ARPU vs COGS?
Use ARPU when you're specifically referring to average revenue per user. Use COGS when the topic is cost of goods sold.