Average Revenue Per User
Mean revenue generated per active user in a period.
Formula
Variables
Example
$120 000 revenue, 3 000 users → ARPU = $40
How it works
Average Revenue Per User (ARPU) tells you how much money, on average, each active user contributes over a chosen time period. It is found by dividing total revenue by the number of active users because this splits the full earnings evenly across the users who generated them, making it easier to compare performance across products, campaigns, or time periods. A higher ARPU usually means each user is generating more value, while a lower ARPU can signal weaker monetization or a larger share of low-spending users.
When to use it
Use ARPU when you want to measure monetization efficiency for a subscription service, app, website, or online platform. It is especially useful for comparing different months, user segments, or marketing channels even when the user counts are different.
Worked example, step by step
Total Revenue = $75,000 Total Users = 2,500 ARPU = Total Revenue / Total Users ARPU = 75,000 / 2,500 ARPU = 30 Final answer: ARPU = $30 per user
Common mistakes to avoid
- Using total sign-ups instead of active users in the period
- Mixing time periods, such as monthly revenue with quarterly user counts
- Forgetting that ARPU is an average, so it does not show how revenue is distributed across individual users
Did You Know?
Telecom companies pioneered ARPU in the 1990s; it's now the standard metric across all subscription businesses.
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