ARPU

Also called: average revenue per user

Average revenue per user: revenue in a period divided by all active users, paying or not. Compare with ARPPU.

ARPU (average revenue per user) spreads a period's revenue over all active users, whether they pay or not. ARPPU (average revenue per paying user) spreads it over paying users only:

$\text{ARPU} = \frac{\text{revenue}}{\text{active users}} \qquad \text{ARPPU} = \frac{\text{revenue}}{\text{paying users}}$

The two are linked by the share of users who pay:

$\text{ARPU} = \text{paying share} \times \text{ARPPU}$

That identity is the reason to track both. ARPU is what you can put next to acquisition cost for all users, and it's the input for forecasting revenue from user counts. ARPPU tells you what a paying customer is worth, and it moves with price, plan mix (monthly vs yearly) and discounts. When ARPU changes, the identity tells you whether more people started paying or payers started paying more.

Before comparing numbers, fix three details: the period (monthly ARPU is not daily ARPU; some teams use ARPDAU, revenue per daily active user), which users count as active (the same definition as your MAU), and gross or net revenue (before or after the store commission and refunds). A yearly plan also makes ARPPU lumpy: recognize it as one-twelfth per month, or the month of a big yearly-plan push will look like a price rise.

Example

In August Halves has 50,000 monthly active users, 1,500 of them pay for Halves Plus, and subscription revenue is $8,250.

ARPU = $8,250 ÷ 50,000 = $0.165
ARPPU = $8,250 ÷ 1,500 = $5.50
Paying share = 1,500 ÷ 50,000 = 3%; check: 0.03 × $5.50 = $0.165 ✓

In September Halves raises the monthly price. MAU stays at 50,000, but only 1,200 users pay, and revenue is $7,800:

ARPPU = $7,800 ÷ 1,200 = $6.50 (up 18%)
ARPU = $7,800 ÷ 50,000 = $0.156 (down 5.5%)

Maya's dashboard shows only ARPPU and it looks like a win. ARPU and total revenue show the truth: the price rise lost more payers than it gained per payer.

Common mistakes

Reporting ARPPU alone. It can rise while revenue falls, because the least committed payers leave first.
Mismatched "active". ARPU over MAU and ARPU over registered users can differ several times over; use one definition.
Gross vs net. Mixing revenue before and after the store commission makes month-to-month changes meaningless.
Yearly plans booked in one month. Spread them over twelve months, or ARPPU jumps and drops for no product reason.
Averaging ARPU across segments. A change in the mix of countries or platforms moves the average even when no segment changed.

Learn it in the course

How to calculate ARPU and ARPPU · How to calculate ARPU and ARPPU, conversion to paid and trial-to-paid, and how a change in the paywall trigger mix fakes a better paywall.