💼 Revenue per User (RPU / ARPU)

Revenue per User (RPU / ARPU)#

Average revenue generated per user over a period.

Important

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What it is#

Revenue per user (RPU) — almost always called average revenue per user (ARPU) — is the average income a business earns per customer over a period (monthly, quarterly, yearly). A unit-economics metric, it answers how much revenue each unit of the user base generates, and it is a staple of telecom, streaming, SaaS and mobile-gaming reporting.

The formula#

\[\text{ARPU} = \frac{\text{total revenue in period}}{\text{active users in period}},\]

where revenue spans subscriptions, in-app purchases and ads, and “active users” is usually MAU or DAU depending on the business.

The key variants#

ARPU counts all users (free and paying); ARPPU counts only paying users — crucial for freemium models; and ARPU can be blended (across everyone) or segmented (by product, geography or cohort). A freemium game with $50,000 revenue across 10,000 MAU has an ARPU of $5, but if only 2,000 pay, its ARPPU is $25 — revealing that a small paying base carries the economics.

How it fits the other metrics#

ARPU is a short-term snapshot of revenue per user, complementing the lifetime view: CLV is total expected revenue over the whole relationship, while CAC is the cost to acquire a user. A healthy business keeps $\text{CLV} > \text{CAC}$, and ideally $\text{ARPU} \times \text{retention} \gg \text{CAC}$.

The limitations#

ARPU is an average, so it hides the distribution (one user at $500 and one at $0 both read as $50), can mask churn (fewer customers paying more keeps ARPU flat while the base shrinks), and means little alone — it must be paired with CAC, churn and CLV to judge whether the business is actually healthy.

Theme: Business & Growth Analytics · All terminology

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Mind map — connected ideas

LTV:CAC Ratio · Customer Lifetime · Blended CAC (Customer Acquisition Cost) · Churn · SaaS (Software as a Service) · Customer Segmentation

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More in Business & Growth Analytics

Blended CAC (Customer Acquisition Cost) · CAC (Customer Acquisition Cost) · Cannibalization · Channel-Specific CAC (Customer Acquisition Cost) · Churn · Cohort · Cohort-Based LTV (Simple Version) · Conversion Rate (CR) · Cost-Per-Click (CPC) Models · Cross-Selling · CTR (Click-Through Rate) · Customer Lifetime · Customer Segmentation · D2C (Direct-to-Consumer)