The average revenue per paying user (ARPPU) is a monetary metric. It sets the total revenue that an app generates in ratio to the total number of paying users. Any user who spends money to buy IAPs (or to pay for a premium app).

Every users of a premium app is a paying user. Thus, the ARPPU equals the ARPU in this case.

The ARPPU is an important KPI because it indicates the value of a paying customer. When comparing it to the CAC, app owners can determine whether their customer acquisition efforts, including user acquisition, conversion optimization, and monetization measures, are profitable. If the ARPPU is higher than the CAC, the marketing efforts are profitable. But if it is lower, the app owner loses money. 

Ways to increase the average revenue per paying user are:

• increasing the conversion (user to paying user) by optimizing funnels
• adding new ways to monetize users
• raising prices for existing monetization options