Glossary | A | Average Revenue Per User (ARPU)
What is ARPU?
Average revenue per user, or ARPU, is a key performance indicator that app developers use to gauge how much revenue they’re earning, on average, from their users.
ARPU can be segmented by customer type, customer demographics, geography, or other similar segments. For certain types of apps, developers commonly track ARPDAU, or average revenue per daily active user.
ARPU is calculated using the following formula: ARPU = total revenue / number of active users
ARPU helps developers understand the impact of their current monetization strategy, and track changes over time.
For example, a developer might introduce a new revenue stream into their app, and study ARPU to see if it rises or falls after the change. Ideally, developers want to adopt a monetization strategy that sustains the highest possible ARPU while maintaining a high degree of customer satisfaction.
An improving ARPU trend line might also be due to other factors, such as an app’s ability to attract higher-value active users, or new features that its existing userbase is willing to pay for. Understanding ARPU can inform the app developer’s financial planning, forecasting, and overall business performance.