Definition
Average revenue per user (ARPU) is the revenue a business earns per user in a period. Subscription companies often use average revenue per account (ARPA) when they sell to companies.
Formula
ARPU = revenue in the period ÷ average number of users in the period.
Example
$90,000 of revenue in a month from an average of 1,800 paying customers gives an ARPU of $50.
Things to watch
- Decide whether free users count. Including them lowers ARPU but shows monetisation across the whole base.
- Compare ARPU by plan and by acquisition source: averages hide the mix.
- ARPU is an input to lifetime value.