What is the Average Revenue per Trial Metric?
The Average Revenue per Trial metric represents the average revenue generated from each new free trial started on your platform – based on the overall revenue generated by any cohort of new free trials. This metric provides insight into the efficiency of your trial programs in generating revenue and the value of each initiated free trial.
You can find it in the Cleeng Dashboard under Analytics.
How is it Calculated?
The formula for calculating Average Revenue per Trial is:
Average Revenue per Trial = (Revenue from converted trials) / (Total free trials started)
- Revenue from converted trials: The total transaction value generated over time by a cohort of users defined by their trial start date(s).
- Total free trials started: The total number of free trials initiated within the same specified period.
How to Use the Average Revenue per Trial Metric in a Subscription Business
The Average Revenue per Trial metric is crucial for evaluating the effectiveness and profitability of your free trial strategies. You can use it to:
- Assess Trial Program Performance: Monitor Average Revenue per Trial to understand how well your trials convert into revenue-generating subscribers. A higher Average Revenue per Trial indicates more effective trial programs.
- Optimize Trial Offers: Analyze how different trial lengths, content access, or onboarding processes impact Average Revenue per Trial. This allows you to refine your trial offers to maximize revenue.
- Evaluate Marketing Campaigns: Measure the Average Revenue per Trial generated from trials originating from specific marketing campaigns. This helps identify the most effective channels for acquiring high-value subscribers.
- Forecast Revenue: Use Average Revenue per Trial to forecast potential revenue from future trial initiatives. By understanding the average revenue generated per trial, you can estimate the financial impact of planned campaigns.
- Compare Trial Cohorts: Track Average Revenue per Trial for different trial cohorts to identify trends and patterns in conversion rates and revenue generation. Changes in Average Revenue per Trial can highlight the impact of product updates, marketing changes, or seasonal variations.