ARPU and customer lifetime value (LTV) are bothcrucial metrics for businesses; however,they measure different aspects of customer value and are used for various purposes. Enhance the effectiveness of your User Acquisition (UA) campaigns by evaluating their impact on your ARPU. This involves gauging the performance of various creatives, campaigns, and channels to pinpoint those generating high-value users.

• For example, if an app is generating $10,000 per month with a total of 200 active paying customers, ARPPU would be $50.
• While ARPPU focuses on paying customers exclusively, it is not the only measure of a user’s average contribution to revenues.
• Regardless of how successful your value proposition is, it’s a dead-end if you can’t monetize it successfully.
• This metric, acting as a potent instrument, can illuminate user revenue and spotlight potential areas for enhancement.
• Rotate the focus between ARRPU and CVR to keep your percent share of paying customers aligned with your long-term strategy.
• This analysis helps determine the efficiency of marketing expenditures, allowing adjustments for more effective allocation of resources.
• Paying and non-paying users have different in-app activities and so separating them out is important for identifying successes as well as areas for optimization.

ARPU Statistics

• John concludes that it may be an attractive company and decides to conduct further analysis.
• ARPU shows how much money a company makes on average from each customer within a specific period, usually monthly or yearly.
• Moreover, ARPU allows businesses to evaluate the effectiveness of their pricing models.
• Make sure each tier offers clear value so customers can pick the plan that suits them best.
• Helping the world’s leading studios and game developers turn their data into insights.

Average Revenue Per Paying User (ARPPU) is the average amount of money you make from a paying customer. Make sure to base your business decisions on data, not on your feelings. Having enough data and tracking the right metrics will give you leverage and help decide which changes you need to make for your app to succeed.

Stop guessing about your digital experience with LogRocket

At the end of the day, the price your users are willing to pay represents the value they perceive. The more value you provide, the more likely your users will pay for different perks. For example, charging a flat fee might leave money on the table if you have plenty of heavy users. Experiment with different ways of charging your users, like usage-based, seat-based, result-based, or a flat fee, to find what resonates the most with your users and what drives the highest ARPPU. Consider Facebook, whose 2017 Q4 ARPU was $6.18 compared to its 2014 Q4 ARPU of $2.81 – the company’s ARPU more than doubled over the three-year period. It’s no coincidence that shares of Facebook saw an impressive run up over the same timeframe.

Everything You Need To Master Financial Modeling

The premise of the ARPPU is similar to that of popular metrics for internet companies, such as daily active users (DAU) per month. The objective is to count only those users that are “active” on the platform. It tells us how much money you are getting from an average paying user.

What company has the highest ARPU?

For example, say you tried out some new messaging in May when ARPPU was $15. Then, in June, you changed the messaging back to the original (and nothing else) and your ARPPU decreased to $12. From this you know that your new messaging in May was more successful at attracting paying users than the old messaging in June. One of the things we love about Putler is its ability to aggregate data from multiple sources. This means you can see a complete picture of your revenue and customer behavior, all in one place.

Common Challenges in ARPU Calculation

Let’s explore some of the key differences and relationships between ARPU and other commonly used revenue metrics. To solve this, Singular collects and attributes revenue data including in-app purchases, ad revenue, and subscriptions. You can also incentivize occasional paying users and try and turn them into whales by inviting them to be brand ambassadors/influencers, or simply offer perks and discounts. For a gaming app you could incentivize these players by inviting them to join a tournament. However many marketers are interested in metrics based on cohort groups, for example, calculating how much revenue was generated by all users who were acquired in the month of May versus June. ARPPU can inform decision-making by helping you understand which channels, networks, campaigns, and even creatives attract the most valuable customers.

Offer subscription models and tiered pricing

For example, if ARPU for new users by Day 3 is $0.1, this means that an average user brings $0.1 to the 4th day of their lifetime. The term ARPU stands for “Average Revenue Per User” and quantifies the typical revenue generated from each user. They not only offer a few different subscription tiers, but you can also arppu formula choose additional add-ons depending on your needs. Letting users pick their features on their own usually increases the amount of money they leave.