Avatar Rendering Cost
Avatar Rendering Cost shows a point score above each avatar's head which indicates how "laggy" they are on the viewer-side. ARC is found in Advanced Menu > Rendering > Info Displays > Avatar Rendering Cost. The score is a factor of the size and number of textures used, and the number and type of primatives used. Avatars with large textures, lots of flexi-prim parts and high prim count objects, and/or invisible parts will score higher than one that uses fewer/smaller textures, using a few sculpties instead of many basic primatives, etc.
The score are color coded. The center of the Yellow band is about a score of 1,000. The numbers turn fully red at 2,000. It's generally best to be considerate of others when putting together your avatar, and to do what you can to stay under a score of 2,000, especially in crowded areas. Under 1,000 is even better. These are only guidelines, but be aware that the higher your score is, the more lag you generate for other people, particularly those with older machines.
Lowering your rendering cost
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What to do if someone with high rendering cost is causing you lag
If you have avatar impostors enabled, mute them. They will be replaced by an imposter, with the effective rendering cost of 1. Their original rendering cost will still be displayed. This is particularly useful on machines that get poor framerates, you can mute high cost avatars to help increase your framerate in crowded areas.