What Is ARPU? (Average Revenue Per User)
The average revenue each user generates over a given period.
Book a free callARPU (Average Revenue Per User) is the average revenue per user, calculated by dividing total revenue for a period by the number of active users in that period. The formula is Total Revenue ÷ Active Users. It is the most direct indicator of monetization performance and a core input to LTV calculations.
How is ARPU calculated?
Non-paying users are included in the denominator — that’s the key difference between ARPU and ARPPU. In mobile games the share of paying users typically sits around 1-5%, so ARPPU can be dozens of times higher than ARPU.
ARPU, ARPPU and ARPDAU
| Metric | Denominator | What it’s used for |
|---|---|---|
| ARPU | All active users | Overall monetization health, LTV input |
| ARPPU | Paying users only | Pricing and package structure analysis |
| ARPDAU | Daily active users | Daily revenue tracking; the standard in games |
Reading all three together shows where the revenue problem is. If ARPU is falling while ARPPU holds steady, the share of paying users has dropped — the problem is in your conversion funnel. If ARPPU is falling too, your pricing or package structure has weakened.
How ARPU relates to LTV
This relationship explains why monetization and retention teams need to work toward the same goal. If you push ARPU up with aggressive monetization and hurt the user experience, lifetime shrinks and LTV can end up lower in net terms. The two metrics have to be optimized together.
How to increase ARPU
- Improve payer conversion. Tests on paywall timing, offer structure and trial length directly affect the share of users who pay.
- Diversify revenue streams. Hybrid models that combine subscriptions, one-time purchases and ad revenue lift ARPU significantly.
- Build price tiers. Instead of a single price, packages aimed at different levels of spending power increase total revenue.
- Price by market. Prices localized to purchasing power parity lift conversion in lower-income markets.
- Optimize ad placements. In ad-monetized models, eCPM floor management and format selection have a major impact on ARPDAU.
Frequently asked questions
What’s the difference between ARPU and ARPPU?
ARPU puts all active users in the denominator; ARPPU counts only paying users. In apps with a low share of payers, ARPPU can be dozens of times higher than ARPU. ARPU measures overall monetization health, while ARPPU measures pricing effectiveness.
What should you do if ARPU is falling?
First, isolate the cause: is it falling because your user base is growing fast and new users haven’t paid yet, or because existing users are spending less? The first is a normal side effect of healthy growth; the second calls for action on the monetization or product side.
How is ARPU measured in ad-monetized apps?
It’s usually tracked daily, as ARPDAU. Ad revenue depends on eCPM multiplied by impressions per user, so to raise ARPDAU you need to improve either inventory pricing (eCPM floors, bidding) or impressions per session.
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