Average Revenue per User (ARPU)

ARPU is calculated by dividing total revenue over a period by the number of active users or accounts in that same period. It helps compare product tiers, track monetization over time, and forecast revenue growth when user counts change. ARPU should be interpreted with churn and usage mix, since upgrades or downgrades can shift the average.

Guides pricing and packaging changes by showing revenue per user trend. Determines which customer segments or plans drive monetization. Supports revenue forecasting when combined with user growth assumptions.

• Guides pricing and packaging changes by showing revenue per user trend.
• Determines which customer segments or plans drive monetization.
• Supports revenue forecasting when combined with user growth assumptions.

• Define 'active user' consistently to avoid misleading ARPU.
• Separate ARPU by plan or segment to identify where value is created.
• ARPU can rise while retention falls, so track both together.
• Discounts and promotions can temporarily depress ARPU.
• Use ARPU with gross margin to understand profitability, not just revenue.

A streaming app has total monthly revenue of $500,000 and 200,000 active users, giving an ARPU of $2.50. After launching a premium tier, ARPU rises to $3.20 but churn increases among free users. The team adjusts pricing and improves trial onboarding to raise ARPU without sacrificing retention.

• Higher ARPU always means healthier business; churn can offset gains.
• ARPU is interchangeable with LTV; LTV includes retention duration.
• One ARPU value is enough; multi-tier products require segmented ARPU.