Average Revenue per User How is ARPU calculated?

arppu calculation

For example, 1-2% is suitable for mobile apps as most users are on a free plan, and very few people make in-app purchases. ARPU gives you an average revenue, including those who don’t pay anything, while ARPPU shows the revenue you get from paying users only.

  • If you want your customers to spend more, constantly improve your content to encourage spending.
  • Then, you can compare the value of your users from each level to determine which of your company’s premium subscription offers are the best revenue drivers.
  • But ARPU says nothing about how much Facebook gets from the average new user over their lifetime in the product.
  • Ratings and reviews are crucial factors that affect most consumer decisions online, from buying in e-commerce stores to joining a membership site.
  • However, this doesn’t mean that businesses with free users should never use ARPU.
  • The fundamental difference between ARPPU and ARPU is the fact that the former only takes into consideration paying customers.

You can’t evaluate average revenue per user in isolation as it’s bound to your customer count. Let’s consider an example of two similar platforms thriving to make $ monthly. ARPU or “Average Revenue Per User” is a metric that helps you understand whether your business model/monetization strategy is working . For this reason, ARPU is one of the most important mobile game KPIs. For example, if you have 100 paying customers and you generated $100,000 in revenue, your ARPPU is $1.00. For technology companies that rely on users, such as software-as-a-service companies or apps, knowing the value of each user is critical to success.

How does Apphud calculate ARPU?

Conversion is truth, so if someone’s not paying you, then they shouldn’t be included in your ARPU. If you do include them, you will end up watering down your revenue average for the month and providing investors/stakeholders with a distorted image of how the company is performing. ARPU should be increasing over time as sales pitches improve and value propositions get clearer and more targeted. Increasing ARPU means that you’re onboarding more of the right customers and selling them on the value they’re interested in.

arppu calculation

However, if you’re only examining the ARPPU of a specific day and the same user has not made a purchase that day, then they will not be included in the calculation. For example, if ARPU for arppu calculation new users by Day 3 is $0.1, this means that an average user brings $0.1 to the 4th day of their lifetime. While ARPDAU focuses on players who have actively engaged with your game every day.

Use rewarded video ads to boost in-app purchases

Targeting tactics help to deliver only the right advertising format to the right user at the right time which helps to ensure the least disruptive experience possible. In this article, we’ll tell you everything you need to know about these crucial metrics. For example, ‘StartGame’ or ‘StartSession’ could be an event that you use. Count the number of unique players doing any action in your app on each day.

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With Apsalar you can further parse your data to measure ARPU by country, vendor and campaign. An alternative to this strategy is to make sure you have a clear add-on and upgrade strategy. If your ARPU is sub $100, then you know you need to get a metric ton of customers to grow a sustainable company.

How Singular helps facilitate ARPPU analytics?

Therefore, I do not recommend evaluating the impact of product changes on monetization using ARPU. Instead, use LTV, conversion to purchase, and other metrics calculated using cohort analysis. We define ARPU as our total revenue in a given geography during a given quarter, divided by the average of the number of MAUs in the geography at the beginning and end of the quarter. While ARPU includes all sources of revenue, the number of MAUs used in this calculation only includes users of Facebook and Messenger as described in the definition of MAU above. Revenue from users who are not also Facebook or Messenger MAUs was not material. For example, the ratio of daily revenue to daily active audience is called ARPDAU .

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I’ve already adjusted the lesson to make sure we start with all users cohort and go to the paid marketing users cohort only in the end of the lesson. Some apps are primarily designed not to drive revenue, but rather to improve overall customer experience. Such apps often have relatively low revenue goals – perhaps to simply break even. In this case, you should compare your ARPU to your acquisition cost in order to see if your app https://intuit-payroll.org/ is meeting this admittedly modest goal. It’s essential to have these expansion strategies in place to cater to this market. As Constant Contact CEO Gail Goodman describes in her talk, “The Long, Slow SaaS Ramp of Death,” a business won’t survive for very long with only a handful of low ARPU customers. This can mean higher LTVs and more opportunities for your company to monetize these customers through cross-sells and up-sells.

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