Average Revenue Per User (ARPU)
What is Average Revenue Per User (ARPU)?
The Average Revenue Per User (ARPU) is the revenue generated (on average) by each active person using your app. This is a very similar metric to Average Revenue Per Account (ARPA), generally used for SaaS models. The difference is that SaaS models tend to look at this based on account level (which may have multiple users within one business), while consumer apps tend to monetize individual users.
Advice from Mobile App Experts
“Aside from apps that provide enough value to justify a subscription model, the important thing is acquiring users and keeping them engaged. The average revenue for an active user is fairly constant, regardless of the monetization method.” - Mark Wilcox, Developer at Developer Economics
How to calculate Average Revenue Per User
($) Total revenue generated during specific time period
(#) Active users during the same period
($) Average Revenue Per User
ARPU can be calculated by dividing the total revenue generated during a specific time period (e.g. week, month, quarter) by the total number of active users during that same time.
For example, if you generated $200 last month and had 4000 active user during that month, your Average Revenue Per User would be $0.05.
$200 / 4000 = $0.05 ARPU
Average Revenue Per User is helpful for determining the ROI of your marketing efforts and calculating the lifetime value of your customers. This metric is also beneficial for evaluating pricing structure (should you charge more?) and understanding how ARPU is changing over time.
ARPU can easily become a vanity metric if it’s not tracked in the context of other metrics such as total revenue or LTV:CAC Ratio. Also, if you have a subscription app without other in-app purchases, your ARPU is going to be predetermined by your subscription price and this metric won’t need to be calculated. A subscription app likely won’t change the ARPU very often (unless you change your pricing frequently) making it less valuable to track this metric.
Relevant Mobile App Metrics and KPIs:
The Average Revenue Per User fluctuates considerably depending on the country, app category, and pricing model. In general, subscription apps tend to have significantly higher ARPU than other revenue models which all come in around $0.04 per month.