Average Revenue Per User

Average Revenue Per User (ARPU) is a metric that calculates the revenue generated per user over a specific period.

Why it matters

Helps assess the effectiveness of monetization strategies.
Provides insights into user value and business growth potential.

How to measure

Divide total revenue by the number of active users.
Commonly measured monthly, quarterly, or annually.

Details

ARPU is a key performance indicator for mobile apps, providing a clear view of revenue performance per user. It is particularly useful for comparing different user segments or time periods to identify trends and opportunities for growth. For mobile engineers and growth teams, understanding ARPU can guide decisions on user acquisition, retention strategies, and pricing models.

To calculate ARPU, sum the total revenue generated in a period and divide it by the number of active users during the same period. This metric can be further segmented by user demographics or geographical regions to gain deeper insights.

Examples & formulas

For example, if an app generates $10,000 in revenue from 1,000 users in a month, the ARPU would be $10.

ARPU = Total Revenue / Number of Active Users

Common mistakes

Ignoring user churn rates, which can skew ARPU if not accounted for.
Focusing solely on ARPU without considering user acquisition costs, leading to misleading profitability assessments.