Average Revenue Per User (ARPU)

What ARPU measures

Average Revenue Per User (ARPU) is total revenue in a period divided by total users in that period. It is a monetization-efficiency metric that says: across everyone we count as a user, what is the average revenue they generated?

The simplest formula:

ARPU = total_revenue / total_users

The definitions of revenue and users matter a lot, which is why ARPU values diverge wildly between reports. Most common variants:

• Paid ARPU. Revenue divided by paying users only. Higher number, narrower base.
• Total ARPU. Revenue divided by all users (free + paid). Lower number, broader base.
• ARPDAU. Average revenue per daily active user. Common for games, less for SaaS.
• ARPPU. Average revenue per paying user. Same as paid ARPU under another acronym.

For subscription apps, ARPU usually refers to monthly paid ARPU unless explicitly stated otherwise.

Why ARPU matters for mobile apps

ARPU is the second-most-watched metric after MRR for subscription apps. It tells you:

• Whether each paying user is generating enough revenue to justify your acquisition cost
• How pricing changes affect monetization efficiency (raise prices, ARPU goes up if churn does not spike)
• Which markets are net-positive contributors when segmented by country
• The denominator of LTV = ARPU / churn_rate

For an indie mobile app with users in 175 countries, aggregate ARPU hides which markets are working. Per-country ARPU is where localized pricing decisions become legible.

How ARPU interacts with localized pricing

Localized pricing changes ARPU in opposite directions across markets:

• Emerging markets: per-user ARPU drops in local currency (you charge less)
• High-income markets (Switzerland, Norway): per-user ARPU sometimes goes up under PPP
• Volume usually expands enough to grow total revenue

If you only watch aggregate ARPU, a localized-pricing change can look bad: "ARPU dropped by 15%!" The right view is per-country ARPU plus paying-user counts. A market that previously had 8 paying users at high ARPU and now has 84 paying users at lower ARPU is a win for total revenue and total LTV, even if average ARPU per user dropped.

What is the difference between ARPU and ARPPU?

ARPU divides revenue by all users (free + paid in some definitions, paid only in others). ARPPU specifically divides by paying users. The acronyms are used inconsistently. When comparing across reports, check which population is in the denominator before drawing conclusions.

How does ARPU connect to LTV?

LTV is roughly ARPU / churn_rate. Doubling ARPU doubles LTV (if churn stays constant). Halving churn doubles LTV (if ARPU stays constant). Most pricing decisions affect both at once, which is why isolated metric movement is harder to interpret than total LTV per cohort.

How to read ARPU correctly

A few traps:

• Currency conversion timing. Total revenue is usually in USD, so per-country ARPU depends on FX at the reporting date. PPP-tuned localized pricing reduces per-country ARPU in USD terms, which is the intended outcome.
• Plan mix. Annual plan users have lower monthly ARPU but higher annual retention. Mixed-plan ARPU can shift just from changing tier-mix without any pricing change.
• Trial period. Most ARPU reports exclude trial users. Some include them with $0 revenue, which depresses the metric artificially.