ARPU(Average Revenue Per User)
Total revenue for a period divided by the number of users in that period, including people who paid nothing.
Definition
ARPU (average revenue per user) measures how much revenue a product earns per user on average over a period, usually a month or a year. It divides total revenue by all users, free and paying, so it reflects both how many users pay and how much they pay. Telecom companies, app businesses, games and media companies use ARPU to compare monetization across time periods, platforms, countries and acquisition channels.
Why It Matters
ARPU connects audience size to revenue. Two apps with the same number of users can have very different businesses because one converts more users to paid or charges more. ARPU also sets your acquisition budget: if a user brings in $3 a month and stays for a year, spending $40 to acquire them is a loss. Tracking ARPU by cohort and channel shows which users are worth paying for and whether pricing, paywall or lifecycle changes actually increase revenue.
How It Works
Choose a period and a user definition, usually monthly active users, then divide total revenue in that period by that user count. Use net revenue, after app store commissions and refunds, if you want ARPU to reflect what the business keeps. ARPU equals ARPPU (average revenue per paying user) multiplied by the share of users who pay, so you can raise it by converting more users or by earning more from each payer.
Example
A puzzle game's numbers for June:
- Revenue after store fees: $84,000
- Monthly active users: 210,000
- ARPU: $84,000 / 210,000 = $0.40
- Paying users: 6,300 (3% of MAU), so ARPPU is $84,000 / 6,300 = $13.33
The team sees that lifting payer conversion from 3% to 4% would raise ARPU to about $0.53 without changing prices.
Best Practices
- 1State whether ARPU uses gross or net revenue and which user count it divides by
- 2Track ARPU by cohort, platform, country and acquisition channel
- 3Read ARPU together with ARPPU and payer conversion to see what moved it
- 4Compare ARPU over the user's lifetime with acquisition cost, not one month alone
- 5Watch ARPU after pricing or paywall tests, since conversion and price can move in opposite directions
ARPU vs ARPPU vs LTV
| Metric | Formula | Answers |
|---|---|---|
| ARPU | Revenue / all users | How much is the average user worth this period? |
| ARPPU | Revenue / paying users | How much does the average payer spend? |
| LTV | Revenue per user over their lifetime | How much is a user worth in total? |