What is the Average Revenue per User?
The average revenue per user (ARPU) is a monetary metric. It sets the total revenue that an app generates in ratio to the total number of users. Or in simple words, it tells app owners how much money they make per user.
The ARPU is an important KPI because it indicates the value of each user. This value allows app owners to determine which CPIs they can pay to make user acquisition campaigns profitable. Thus, it is the basement for reasonable marketing planning.
To evaluate the outcome of major changes to an app, the ARPU is a great metric. For instance, changes in the ARPU indicate the success of new monetization measures perfectly.
It reflects the sum of numerous revenue streams:
- sales of the app, in-app purchases, or physical products
- ad revenues from showing banners or videos inside the app
- revenues from other sources outside of the app